Question: 2. (10 points) A 5-year U.S. treasury bond with a yield of 3% per annum (continuously compounded) pays $4 coupon payments at the end of

2. (10 points) A 5-year U.S. treasury bond with a yield

2. (10 points) A 5-year U.S. treasury bond with a yield of 3% per annum (continuously compounded) pays $4 coupon payments at the end of each year. The principal amount is $100. (a) What is the bond's price? (b) What is the bond's duration? (c) Use the duration to calculate approximately the effect on the bond's price of a 0.2% (= 20 basis points) increase in its yield

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