A bond which has just been issued possess the below features : Coupon Expiry Macaulay Duration Yield-to- Maturity (YTM) 8% 4% 7 years 10 years Required: (a) Determine the modified duration based upon the above data. (2 marks) (b) Modified duration is a better way to determine the bond's sensitivity to interest rate changes as compared to the expiry period of the bond. Do you agree with this statement ? Justify your stance by providing proper explanations. (4 marks) (C) Determine the change's direction in modified duration under the following situations : (i) The bond's coupon was 2% (1 mark) (ii) The bond's expiry was 3 years (1 mark) (d) Provide the definition of convexity and discuss how modified duration and convexity are used to determine dP/dI (P: Bond price, I: Interest rate). (4 marks) A bond which has just been issued possess the below features : Coupon Expiry Macaulay Duration Yield-to- Maturity (YTM) 8% 4% 7 years 10 years Required: (a) Determine the modified duration based upon the above data. (2 marks) (b) Modified duration is a better way to determine the bond's sensitivity to interest rate changes as compared to the expiry period of the bond. Do you agree with this statement ? Justify your stance by providing proper explanations. (4 marks) (C) Determine the change's direction in modified duration under the following situations : (i) The bond's coupon was 2% (1 mark) (ii) The bond's expiry was 3 years (1 mark) (d) Provide the definition of convexity and discuss how modified duration and convexity are used to determine dP/dI (P: Bond price, I: Interest rate). (4 marks)