2. Estimate the DURATION of a par value 5-year, 20% coupon bond. Discount rate is also 20%. 1 2 3 4 5 Year Coupon 20% PV % PV of Total Value Weighted Maturity 1*(4) 1 2 3 4 5 5 Duration= a. Interpret your results. What does duration tell you? i. Based on your estimated duration, what are the effect on the bond's price if interest rates go from 20% to 21%. Explain. 2. Estimate the DURATION of a par value 5-year, 20% coupon bond. Discount rate is also 20%. 1 2 3 4 5 Year Coupon 20% PV % PV of Total Value Weighted Maturity 1*(4) 1 2 3 4 5 5 Duration= a. Interpret your results. What does duration tell you? i. Based on your estimated duration, what are the effect on the bond's price if interest rates go from 20% to 21%. Explain