Don't really understand how to start the assignment.

1. Three years ago, XYZ Inc. issued bonds with a maturity period of 15 years. The coupon payments are to be made on a semi-annual basis and the coupon rate is 6%. The current price of the bond is $1125.74. The bonds have a face value of $1000. Compute Macaulay's Duration (MD in years) and Modified Duration (D* in years). How long do you suggest that an investor should hold on to this bond? (20) 2. Refer to the information provided in Question#1. If the yield-to-maturity decreases by 5 basis points, compute the percentage increase/decrease in the bond price. Compute the new bond price. (10) 3. Refer to the information provided in Question#1. If the yield-to-maturity is the same as before but the coupon rate is now 4%, compute the Modified Duration (in years) and the percentage increase/decrease in bond price for a 5 basis point decline in yield-to-maturity. Compare your results with those obtained in Answer 2 and write a brief note highlighting the main observations. (20) 4. Refer to the information provided in Question#1. If the yield-to-maturity is now 4%, compute the Modified Duration (in years) and the percentage increase/decrease in bond price for a 5 basis point decline in the market rate of interest. Compare your results with those obtained in Answers 2 and 3 and write a brief note highlighting the main observations. (20) 5. Refer to the information provided in Question#1. If the market rate of interest changes to 2% at the end of the sixth year, verify that the interest rate sensitivity of this bond is very low if the bond is held for a period approximately equal to its duration. (30)