Calculate this bonds modified duration

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You have an 8 percent, $1,000 par bond that matures in 3 years. If the bond’s yield to maturity is 10 percent,

a. Calculate this bond’s modified duration

b. Suppose the YTM goes down from 10 percent to 9.5 percent, calculate an estimate of the price change.

c. Discuss the impact of an (1) increase in inflation (2) a decline in credit rating of the bond issuer on the duration of the bond.

Reference no: EM13948626

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