Question

Calculate the duration of a $1,000 6% coupon bond with three years to maturity. Assume that...

Calculate the duration of a $1,000 6% coupon bond with three years to maturity. Assume that all market interest rates are 7%.
Solution:
Year 1 Year 2 Year 3 Sum
Payments
PV of Payments
Time Weighted PV of Payments
Time Weighted PV of Payments Divided by Price
Curent bond price
Duration of the Bond:
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