Question: (PLEASE SHOW WORK) - no financial calculator - no excel 2. David Hoffman purchases a bond with $1,000 principal, 20-year maturity, and 8% coupon (annual

(PLEASE SHOW WORK) - no financial calculator - no excel

2. David Hoffman purchases a bond with $1,000 principal, 20-year maturity, and 8% coupon (annual payments). Yields on comparable bonds are 10%. Bob expects that two years from now, yields on comparable bonds will have declined to 9%. Find his expected yield, assuming the bond is sold in two years.

3. Calculate the duration of a $1,000, eight-year zero coupon bond using annual compounding and a current market rate of 7 per cent.

4. Calculate the duration for a $1000, 4-year bond with a 4.5% annual coupon, currently selling at par. Use the duration to estimate the percentage change in the bonds price for a decrease in the market interest rate to 3.5%.

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