Consider the following. a. What is the duration of a four-year Treasury bond with a 10 percent

Question:

Consider the following.
a. What is the duration of a four-year Treasury bond with a 10 percent semiannual selling at par?
b. What is the duration of a three-year Treasury bond with a 10 percent semiannual selling at par?
c. What is the duration of a two-year Treasury bond with a 10 percent semiannual selling at par?
d. Using these results, what conclusions can you draw about the relationship between duration and maturity?

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...