answer all the questions briefly, I will give u a thumb!

4. Please use the following example to explain the interest rate risk associated with bond investments clearly. Please first answer each steps in the question and then explain interest risk using associated numbers that you have got. (10 marks) You purchased 1000$ face value, 10% coupon bond with 1000 $ with 3 years term to maturity. Assume that the yield curve is flat. a) What is the yield to maturity of the bond when your purchase the bond? b) What is the duration of the bond? c) Assume that right after you bought the bond, the interest rate drop to 5%, what is the price of the bond now? Use duration to relate the relationship between interest rate change and bond price change. b) Now assume that the yield curve stays at 5% for two years and you hold the bond for two years, what is your rate of return for your investment