A corporate bond has 2 years to maturity, a coupon rate of 9%, a face value of $1,000 and pays coupons semiannually. The market interest rate for similar bonds is 9.2%.

Part 1: What is the price of the bond (in $)? *(Please enter your answer with 4 digits after the decimal point!)Part 2:*What is the value of the numerator to be used in calculating bond’s duration?

*(Please enter your answer with 6 digits after the decimal point!)*

*Part 3:*What is the bond’s duration? *(Please enter your answer with 8 digits after the decimal point!)Part 4:*What is the modified duration (MD)?

*(Please enter your answer with 8 digits after the decimal point!)*

Part 5:What is the dollar duration (DD)?

Part 5:

*(Please enter your answer with 4 digits after the decimal point!)*

Part 6:If the market interest rate decreases by 101 basis points, what is the percentage change in bond price (?P/P)?

Part 6:

*(Please enter your answer with 6 digits after the decimal with % sign at the end, .e.g. 9.123456%)*

Part 7:If the market interest rate decreases by 101 basis points, what is the dollar change in bond price (?P)?

Part 7:

*(Please enter your answer with 4 digits after the decimal point!)*

*Part 8:*Convexity Calculations: Step1: What is the change in bond price if the yield decreases by 1 basis points ?P^{–}? *(Please enter your answer with 8 digits after the decimal point!)Part 9:*Convexity Calculations: Step2 What is the change in bond price if the yield increases by 1 basis points, ?P

^{+}?

*(Please enter your answer with 8 digits after the decimal point!)*

Part 10:Convexity Calculations: Step3 What is the convexity of the bond?

Part 10:

*(Please enter your answer with 6 digits after the decimal point!) Note: This is the answer to last step in practice problems. In this exam, you are not asked to answer the steps F.3 and F.4 of practice problems.*

*Part 11:*

What is the convexity adjusted percentage change in bond price if market interest rate decreases by 101 basis points%? *(Please enter your answer with 6 digits after the decimal point!)**(Please enter your answer with 6 digits after the decimal with % sign at the end, .e.g. 9.123456%)*