What is the duration of a two-year bond

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Consider the following.

a. What is the duration of a two-year bond that pays an annual coupon of 9 percent and whose current yield to maturity is 13 percent? Use $1,000 as the face value. (Do not round intermediate calculations. Round your answer to 3 decimal places. (e.g. 32.161))

b. What is the expected change in the price of the bond if interest rates are expected to decline by 0.5 percent? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))

Reference no: EM131552956

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