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Calculate the duration of the bond

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Information about Bonds A and B is given below. Construct a portfolio of these two bonds to match the value and duration of a 20-year, 8% coupon bond (Face value is $100). Bond is trading at par. Hint: First calculate the duration of the bond.

Bond A: 1 year zero coupon bond. Price=$94.26 for $100 face value.

Bond B: 30 year zero coupon bond. Price $16.97 for $100 face value.

Reference no: EM133068440

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