Question: Actuary problem. I provided the answer, please help me to get the answer process. 6. A 2-year annual coupon bond has coupons of 40 per

Actuary problem. I provided the answer, please help me to get the answer process.

6. A 2-year annual coupon bond has coupons of 40 per year starting one year from now, and matures in 2 years for 1000. The yield to maturity is 7%. (a) Find the duration of the bond. (b) Find the modified duration () Find the approximate % increase/decrease in the price if the yield increases by 0.5%. Answer: (a) 1.96 (b) 1.83 (e) price decreases by about 0.9%

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