Question: Duration Problems Fin303 2015 1. You own a three-year bond with a coupon rate (CR) of 6%, and a yield to maturity (YTM) of 8%.

Duration Problems Fin303 2015

1. You own a three-year bond with a coupon rate (CR) of 6%, and a yield to maturity (YTM) of 8%. Coupons are paid annually and the bond has a face value of $1,000. Find the duration of this bond.

Duration Problems Fin303 2015

5. You invest $5,000 in a 2-year bond with an annual coupon rate (CR) of 8%, and also invest $10,000 in a 3-year bond with a CR of 6%. Both bonds have a face value of $1,000. If the appropriate discount rate is 10% p.a., what is the duration of your two-bond portfolio?

Duration Problems Fin303 2015

6. You have a bond portfolio consisting of four identical 1-year bonds with an annual coupon rate (CR) of 5%, and eight identical 2-year bonds with a CR of 6%. All bonds have a face value of $1,000. If the appropriate discount rate is 10% p.a., what is the duration of your bond portfolio?

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