Question: Duration Compute the duration on 2 instruments, both of whose discount rates=9% and face values=$1000. (7) Bond 1: 3 years, coupon rate of 8% annually,

Duration

Compute the duration on 2 instruments, both of whose discount rates=9% and face values=$1000. (7)

Bond 1: 3 years, coupon rate of 8% annually, face value to be returned at the end of 3 years

Bond 2: $40 semi-annual coupon payments for 3 years and the face value returned in 10 years

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