Just do b and C. DONT USE CHATGPT

Question 2 Assume the yield curve is flat shown as following table. A cash and \$duration-neutral butterfly is to be constructed by selling one thousand 7-year coupon paying bonds and purchasing qs and ql coupon paying bonds with maturities 3 and 15 years respectively. More information on the bonds to be used in the strategy is given below: Note that we are assuming all bonds pay interest semi-annually. (a) Explain how to interpret the modified duration of -8.86 . 15-year maturity bond. (b) Write down the system of equations that needs to be squer in order to find qs and ql and verify that the solution to this syste is )z=679.32 and ql= 366.23 . (c) Find the profit from this strategy if yield down to 5% pa. Question 2 Assume the yield curve is flat shown as following table. A cash and \$duration-neutral butterfly is to be constructed by selling one thousand 7-year coupon paying bonds and purchasing qs and ql coupon paying bonds with maturities 3 and 15 years respectively. More information on the bonds to be used in the strategy is given below: Note that we are assuming all bonds pay interest semi-annually. (a) Explain how to interpret the modified duration of -8.86 . 15-year maturity bond. (b) Write down the system of equations that needs to be squer in order to find qs and ql and verify that the solution to this syste is )z=679.32 and ql= 366.23 . (c) Find the profit from this strategy if yield down to 5% pa