Question: Please answer a,b and c. 3. (a) Calculate the duration of a four-year corporate bond paying 6 percent interest annually, selling at par. Principal of

Please answer a,b and c.

3. (a) Calculate the duration of a four-year corporate bond paying 6 percent interest annually, selling at par. Principal of $30,000,000 is due at the end of four years. (b) What is the relationship between duration and the time to maturity? Briey explain. Assuming interest rates were paid semi-annually in (a) above, what would happen to the duration value computed in a? (It is not necessary to do any computations to answer this question)

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