An investor is considering purchasing a 1000 treasury bond, Financial Management

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An investor is considering purchasing a 1000 treasury bond

An investor is considering purchasing a $1,000 Treasury bond with a 3- year maturity, a 6% coupon and an 8 % required rate of return. The bond pays interest semi annually. Show your work.

A) What is the bonds duration?

B) What is the bonds modified duration?

C) If annual promised yields decrease 50 basis points (i.e. 0.50%) immediately after the purchase, what is the predicted price change in percent based on the bond's duration?

D) What is the bonds new expected price?

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