An insurance company is analyzing three bonds and is using duration as the measure of interest rate risk All three bonds trade at a yield to maturity of 10 percent, have $10,000 par values, and have five years to maturity The bonds differ only in the amount of annual coupon interest that they pay 8...

a Fiveyear Bond Par value 10000 R 10 Maturity 5 years ...

An insurance company is analyzing three bonds and is using duration as the measure of interest rate

Question:

An insurance company is analyzing three bonds and is using duration as the measure of interest rate risk. All three bonds trade at a yield to of 10 percent, have $10,000 par values, and have five years to The bonds differ only in the amount of annual interest that they pay: 8, 10, and 12 percent.
a. What is the duration for each five-year bond?
b. What is the relationship between duration and the amount of interest that is Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...