1. A bond pays annual interest. Its coupon rate is 11.2%. Its value at maturity is $1,000. It matures in 4 years. Its yield to maturity is currently 8.2%. The duration of this bond is _______ years.
a) 3.20
b) 4.00
c) 2.95
d) 3.46
2. A bond currently has a price of $1,050. The yield on the bond is 7%. If the yield increases 21 basis points, the price of the bond will go down to $1,021. The duration of this bond is ____ years.
a) 14.09
b) 13.14
c) 12.26
d) 14.50