You have constructed a table to calculate the duration of 2 year coupon paying bonds issued by Earth Bank at a yield of 5% pa compounded half-yearly. The bonds have a face value of $120,000 and a coupon rate of 4% pa compounded half-yearly. You printed up the table so that you could take it to a meeting, but unfortunately the final row has been cut off the printout.

a)Complete the table. Give your answers as decimals to 4 decimal places.

Cash flow	Amount ($)	Present value of the cash flow (PVCF)	Weight (PVCF/price)
1	2,400	2,341.4634	0.0199
2	2,400	2,284.3546	0.0194
3	2,400	2,228.6386	0.0189
4

b)Calculate the duration (D) of the Earth Bank bonds using the rounded values in the table. Give your answer in years to 2 decimal places.

D = years?

c)If the yield were to decrease immediately, the duration of the bonds would:

increase, decrease or remain unchanged?