Question

What is the duration of a bond with three years to maturity and a coupon of 7.1 percent paid annually if the bond sells at par? (Do not round intermediate calculations and round your answer to 5 decimal places, e.g., 32.16161.) Duration

Answer 1

let So, Since par value $1000 Annual coupon amount $1000 * 7.11. $ 71 Bond is selling at par, YTM = coupon rate so, YTM : 7.1% بیا Xay * لبه 9 «αν Present volux Factor (7.1%) present value $ 71 I 1.071) :0.933 707 66.2932 0.066293 0.066293 $ 71 0123717 C ZU2' 0.871808 61.90 0061898 0.871808 2615425 3 $1071 (070)3 B0814013871.81 looo 2.80552 So Duration of bond = 2.80552 years