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A bond has a coupon rate of 8% (annualized) and pays semiannual coupon. It has a...

A bond has a coupon rate of 8% (annualized) and pays semiannual coupon. It has a par value of

$2000, and a yield of 6%.

It is due in 3 years.

A.Compute the price of the bond.

B.Compute Macaulay duration.

C.If the yield increases by 0.2% compute the approximate price change using the

Macaulay duration.

D. If the Federal Reserve hikes rates what effect should it have on the bond price

.

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