Question: Use the following setup for the next 4 problems: Suppose a Certificate of Deposit (a CD) has a time to maturity of 2 years, has

Use the following setup for the next 4 problems: Suppose a Certificate of Deposit (a CD) has a time to maturity of 2 years, has an implied rate of interest of 2%, and will pay out $52,038.81 to the depositor at the time of maturity.

1) What is the current value of this CD? Assume interest is compounded monthly

2) What is the Duration of this CD in years?

3) What is the dollar-duration of this CD?

4) If the interest rate factor were to increase by 1% on all assets, what would you estimate the new value of this CD to be based on its duration or dollar duration?

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