Consider a 6 % (2) bond which matures in 3 years. The face value is $100. The annual yield is 8%
Required:
Question 1: Draw the cash-flow chart of the bond
Question 2: Using the definition, find the duration of the bond
Question 3: Using price sensitivity formula, find the approximate price when the yield changes to 9% and 7%, respectively
Question 4: Is there any difference in change of price? Justify your answer
Note: Please provide through step by step calculations.