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What is the duration of a 2 year bond that pays a 5% annual coupon with...

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Finance

What is the duration of a 2 year bond that pays a 5% annualcoupon with a 9% YTM? Use $1000 as the face value of the bond.Using the duration, what is the expected change in the bond ifrates are expected to drop by 25 basis points?

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SolutionThe duration of the bond is 19507 yearsPlease find the attached screenshot of the excel sheetcontaining the detailed calculation for the solutionAs per the information given in the questionThe Duration of the bond 19507 yearsYield to    See Answer
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Transcribed Image Text

What is the duration of a 2 year bond that pays a 5% annualcoupon with a 9% YTM? Use $1000 as the face value of the bond.Using the duration, what is the expected change in the bond ifrates are expected to drop by 25 basis points?

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