Determining the bonds-duration

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An insurance company is analyzing three bonds and is using duration as the measure of interest rate risk. All three bonds trade at a yield to maturity of 10% , have maturity of 5 years and have $10,000 par values. The bonds differ only in the amount of annual coupon interest they pay: 8, 10, and 12%

a) What is the duration for each of the bonds?

b) What is the relationship between duration and the amount of coupon interest that is paid?

Reference no: EM1332610

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