An insurance company is analyzing the following three bonds, each with five years to maturity, and is

Question:

An insurance company is analyzing the following three bonds, each with five years to maturity, and is using duration as its measure of interest rate risk:
a. $ 10,000 par value, rate = 8%, rb = 0.10
b. $ 10,000 par value, rate = 10%, rb = 0.10
c. $ 10,000 par value, rate = 12%, rb = 0.10 What is the duration of each of the three bonds?

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a...