BOND DURATION, C AND vOLATILITY Consider a bond with semiannual coupons whose redemption value equals the face value. Let r semiannual coupon rate (decimal form) j /2 semiannual yield rate (decimal form) number of half years to maturity 1. Suppose a bond has a face amount of $10,000, a 7% annual coupon mature at rate (r 05). It w 035) and a yield to maturity of 10% face in 10 years (n 20). Compute its Macaulay duration and modified duration directly from the definition of Duration, namely: (2) where: 2. Tabulate the duration values for a bond maturing in 10 year (n 20) for the 16 combinations of yields and coupon rates below: r 0, .025, .035, .05 0, .01, .025, .05 Use the duration formula below: 1 j 1 j+n (r- j for j r (1+ j rn2 rn 2n for j 0 2rn 2