Problem: A bond has a face value of $100, a coupon rate of 8% and 5 years to redemption at par. The annual interest payment has just been made.
(a) What is the price of the bond if market interest rates are;
(i) 6%
(ii) 7%
(iii) 8%
(iv) 10%
(b) What is the duration of the bond if market interest rates are 7%?
(c) What will be the change in value of the bond for a 1% change in market interest rates?