A bond with duration of 10 years has yield to maturity of 10%. this bond's volatility is:

Given:

Duration = 10 years

Yield to maturity = 10%

To find: Bond volatility.

Solution:

Volatility (in percentage) = Duration / (1+yield)

Now putting values in the formula,

10 / (1+10%)

10 / (1+10/100)

10 / (1+0.1)

10/1.1 = 9.09%

So, bond volatility is 9.09%.