Consider a 30-year corporate bond paying 9 percent semi-annual coupon. The current yield to maturity is 11 percent.
a. Find the modified duration. Make sure to show your work.
b. Refer to part a. If the interest changes by 25 basis points, what is the exact change in price? Make sure to show your work.
c. Refer to part b. If the interest changes by 25 basis points, what is the approximate change in price?