Compute the duration for Bond C below (and think about the ranking of the bonds on the basis of their price volatility). The current rate of interest is 8%, so the prices of bonds A and B are $1,000 and $1,268 respectively.

Bond A:8% coupon, 10 year term, duration of 7.25

Bond B:12% coupon, 10 year term, duration of 6.74

Bond C:8% coupon, 5 year term,duration:?

[Exam Prep: Confirm your findings by calculating the percentage change in the price of each bond when interest rates rise from 8 to 12 percent (A now worth $774 and B worth $1000)]