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What is the duration of a two-year bond that pays an annual coupon of 10 percent...

What is the duration of a two-year bond that pays an annual coupon of 10 percent and whose current yield to maturity is 14 percent? Use $1,000 as the face value. (Do not round intermediate calculations. Round your answer to 3 decimal places. (e.g., 32.161)) (ANSWER TO THIS IS 1.9000 AND THAT IS CONFIRMED, I NEED HELP WITH PART B)
b.

What is the expected change in the price of the bond if interest rates are expected to decline by 0.7 percent? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16)) (IN DOLLARS)
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Answer #1

Solution :-

A )

Face Value= $1000

Coupon Rate =10%

Yield Rate= 14%

Maturity= 2 years

Duration of Bond = 1.906 Years

New interest Rate = 14% - 0.7% = 13.3%

Price = $945.17

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