Question

Find the duration of a 8% coupon bond making annual coupon payments if it has three years until maturity and a yield to maturity of 7.8%. What is the duration if the yield to maturity is 11.8%? (Do not round intermediate calculations. Round your answers to 4 decimal places.)

YTM	Duration
7.8% YTM

Answer 1

a) YTM of 7.8%

Formulas Used:

So, duration is 2.7839 years

b) YTM = 11.8%

Formulas Used:

So, duration is 2.7720 years