1.A manager of a commercial bank's security portfolio is analyzing three bonds and is using duration as the measure of interest rate risk.The three bonds all trade at a yield to maturity of 10 percent and have $10,000 par values.The bonds differ only in the amount of annual coupon interest that they pay: 8, 10, or 12 percent.

a.What is the duration for each five-year bond?

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