1. A 25-year annuity-due with annual payments has a first payment of $100,000, with each succeeding payment decreasing by 10%. Determine the present value of this annuity if the effective annual rate of interest 2.5%.
2. Calculate the price of a 5 year note, if the coupon rate is 4% and the ytm is 12%.
3. A 7% annual-pay coupon bond has seven years to maturity. The bond is currently trading at $105.50. Using a 50 basis point change in yield, what is the approximate modified duration of the bond?