Rate Convention: 1 = EAR, 0 = APR 0 Annual Coupon Rate (CR) 10,0% Yield to Matur

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Rate Convention: 1 = EAR, 0 = APR 0 Annual Coupon Rate (CR) 10,0%     Yield to Maturity (Annualized) (y) 5,5% Number of Payments / Year (NOP) 4 Number of Periods to Maturity (T) 8 Face Value (PAR) $1 000 Outputs Discount Rate / Period (r) Coupon Payment (PMT) Period Time (Years) Cash Flows Present Value of Cash Flow Weight Weight * Time Duration Modified Duration (b) Consider a zero coupon bond maturing in 1.5 years with face value of $1,000. Would this zero-coupon bond have longer or shorter duration than the bond described above? Explain why. (c.) Using the bond in part a, calculate approximation to the new bond price if the yield to maturity increases by 1%. Use modified duration in your calculations Rate Convention: 1 = EAR, 0 = APR 0 Annual Coupon Rate (CR) 10,0%     Yield to Maturity (Annualized) (y) 5,5% Number of Payments / Year (NOP) 4 Number of Periods to Maturity (T) 8 Face Value (PAR) $1 000 Outputs Discount Rate / Period (r) Coupon Payment (PMT) Period Time (Years) Cash Flows Present Value of Cash Flow Weight Weight * Time Duration Modified Duration (b) Consider a zero coupon bond maturing in 1.5 years with face value of $1,000. Would this zero-coupon bond have longer or shorter duration than the bond described above? Explain why. (c.) Using the bond in part a, calculate approximation to the new bond price if the yield to maturity increases by 1%. Use modified duration in your calculations

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