Calculate the price of the bond

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A bond with 2 years to maturity has a semi-annual coupon rate of 3% and face value £100. Assume that the yield curve is flat at 4%. Calculate the price of the bond, explaining carefully your calculations. Calculate and interpret the Macauley Duration for the bond. Calculate the bond's Modified Duration and estimate the change in the bond's price that would be associated with a 75 basis point increase in spot rates, explaining carefully your results.

Reference no: EM132774598

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