Question: (a) Consider a $1,000 face value 9.5% coupon bond with 2.5 years left to maturity that pays semi-annual interest. If the YTM or the market

(a) Consider a $1,000 face value 9.5% coupon bond with 2.5

(a) Consider a $1,000 face value 9.5% coupon bond with 2.5 years left to maturity that pays semi-annual interest. If the YTM or the market rate is 8.5%, find the following: Macaulay Duration Modified Duration Approximate Modified/Effective Duration Approximate Convexity (b) If the Modified Duration of a bond is 9.8 and the approximate convexity is 456, what should be the approximate price drop for that bond in percentage for a 75bp increase in YTM? What should be the approximate price increase for that bond in percentage for a 75bp decrease in YTM

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