Question: (a) Calculate modified duration using the information above. (b) Explain why modified duration is a better measure than maturity when calculating the bond's sensitivity to

(a) Calculate modified duration using the information above. (b) Explain why modified duration is a better measure than maturity when calculating the bond's sensitivity to changes in interest rates. (c) Identify the direction of change in modified duration if: i. The coupon of the bond were 4 percent, not 8 percent. ii. The maturity of the bond were 7 years, not 15 years. (d) Define convexity and explain how modified duration and convexity are used to approximate the bond's percentage change in price, given a change in interest rates

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