Question 3 A$100 000 bond has 3 years to maturity, and 8% p.a. coupon rate (paid annually). The current yield rate is 10%. Required: a) What is the duration of this bond? b) What is the price of this bond? c) If the current yield is decreased by 100 basis points, 1) What is the percentage change in bond price using the duration approach? 2) What is the price of this bond with this new yield rate?

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A: Here, Modified Duration is 1.952 years

Q: Question 4 (a) Consider a 3-year forward contract to buy a coupon-bearing bond thatwill mature…

A: a.Initial: Forward Price ≈ $90.903;  b.18 Months Later: Forward Price ≈ $85.662.Explanation:Step…

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