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Bond 1 has a 10% annual coupon rate, $1000 maturity value, n = 5 years, YTM = 10% (pays a $100 annual coupon at

the end of each year and $1,000 maturity payment at maturity at the end of year 5). Bond 2 is a zero coupon bond with a $1000 maturity value, and n = 5years; YTM= 10%. (has no coupon payments; only a $1,000 maturity payment paid at maturity at the end of year 5).


What is the price, duration, and modified duration of both bonds?

Top Answer

Bond 1: Price = $1000 duration = 4.17 years Modified... View the full answer

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