Question: Calculate durations and modified durations for the 4% coupon bond and the strip in Table. The answers for the strip will be easy. For the

Calculate durations and modified durations for the 4% coupon bond and the strip in Table. The answers for the strip will be easy. For the 4% bond, you can follow the procedure set out in Table 3.3 for the 11¼% coupon bonds. Confirm that modified duration predicts the impact of a 1% change in interest rates on the bond prices.

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