Question: (Bond Yield & Duration) A 5-year bond with a face value of $100 and a yield of 11% (continuously compound) pays an 8% coupon at

$(Bond Yield \& Duration) A 5-year bond with a face value$

(Bond Yield \& Duration) A 5-year bond with a face value of $100 and a yield of 11% (continuously compound) pays an 8% coupon at the end of each year. a) What is the bond's price? b) What is the bond's duration? c) Use the duration to calculate the effect on the bond's price of a 0.2% decrease in its yield. d) Recalculate the bond's price on the basis of 10.8% per annum yield and verify whether the results is in agreement with your answer to c )

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