Calculate the duration of a $1,000, 6% coupon bond with three years to maturity. Assume that all market interest rates are 7%.
Added by Tyler F.
Step 1
First, we need to find the present value of each cash flow. The bond pays a 6% coupon, so it pays $1,000 * 0.06 = $60 per year. The bond also pays the face value of $1,000 at the end of the third year. Show more…
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