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Posted on Sep 20, 2024

A 1 2 - year annual coupon bond is currently selling for its par value of $ 1 , 0 0 0 with an annual

12 -

year annual coupon bond is currently selling for its par value of $

1, 000

with an annual yield of

5 % .

If the bond is callable at

105 %

of par, what is the effective duration of the bond, assuming rates change by

1 % ?

The answer is

6.69

years, please provide the steps and explanation to get there manually.

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