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A bond pays annual interest its coupon rate is 9.2% lts value at maturity is $1,000. lt matures in 4 years. Its yield to maturity is currently 6.2%.What is the duration of this bond in years.A. 3.11B. 4.00C. 3.55D. 3.34

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Answer:

Modified = 3.34

Macaulay = 3.55

Explanation:

Given :

Coupon rate = 9.2%

Value to maturity or face value = $1000

Yield to maturity = 6.2%

Years to maturity = 4 years

The bond duration in years cab be obtained using a financial calculator or excel ;

Inputting the values above into a financial calculator :

The modified duration is : 3.340

Tbe Macauley duration : 3.547

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