Use Spreadsheet 16.3 to test some of the rules for duration presented a few pages ago. What happens to duration when you change the coupon rate of the bond? The yield to maturity? The maturity? What happens to duration if the bond pays its coupons annually rather than semiannually? Why intuitively is duration shorter with semiannual coupons?

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Spreadsheet 16.3 Using Excel functions to compute duration B 1 Inputs Formula in column B 2 Settlement date 1/1/2000 3 Maturity date 1/1/2002 DATE(2000,1,1) DATE(2002,1,1) 4 Coupon rate 0.08 0.08 5 Yield to maturity 6 Coupons per year 7 0.10 0.10 2 8 Outputs 9 Macaulay duration 1.8852 =DURATION(B2, B3, B4, B5, B6) 10 Modified duration 1.7955 |=MDURATION(B2,B3, B4, B5, B6)