What is the modified duration of this bond

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Reference no: EM131490262

A bond has a face value of $1,000 and a coupon rate of 3%. Interest is paid semi-annually. This bond matures in 3 years. Current market interest rates are 4%.

What is the modified duration of this bond?

If interest rate decrease 1%, what is the new bond price as predicted by modified duration?

Please show all work. Can use financial calculator to get first part of problem PV, FV, IY, N, PMT or excel just show it in the problem.

Reference no: EM131490262

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