Duration (cont.) Suppose there is a 3-year bond with a par value of $1,000, a coupon rate of 8%, and a yield to maturity of 10%. It pays the coupons annually. What is the bond's duration? Properties of Duration (cont.) At the yield of 15%, the duration of a perpetuity that pays $100 per year is: Bond A has a duration of 2 years and a market value of $1,200; bond B has a duration of 4 years and a current price of $800. What is the duration of a bond portfolio consisting of these two bonds? 20