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Calculate the duration of the following two bonds:

a. A $1,000 face value bond, with a coupon of 7% (paid annually), a yield to maturity of 8%, and a maturity date 15 years from today.

b. A $1,000 face value bond, with a coupon of 4% (paid annually), a yield to maturity of 3%, and a maturity date 12 years from today.

c. Explain why the 12 year bond has the longer duration, despite having the shorter time to maturity.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92415141

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