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20 February, 14:15

What is the duration of a two-year bond that pays an annual coupon of 10.8 percent and has a current yield to maturity of 13.3 percent? Use $1,000 as the face value. (Do not round intermediate calculations. Round your answer to 4 decimal places. (e. g., 32.1616))

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  1. 20 February, 17:33
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    Year cash flow at 10.8% PV of cash flow at 13.3% discount PV X time

    1 108 95.3222 95.3222 x 1

    2 1108 863.1374 863.1374 x2

    Total 958.4596 1821.597

    Duration of bond = 1821.597 / 958.4596

    = 1.9 year
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