DURATION time 0 1 CALCULATE THE DURATIONS OF THE FOLLOWING 10-YEAR BONDS: 1) 8.25% coupon (yield = 8.25%) 2) 12.00% coupon (yield = 12.00%) 3) 0% coupon (yield = 8.25%) 4) which of the three has the highest duration? Why? coupon yield 8.25% 8.25% Cash Flow ($) discount factor PV present value ($) T (t/m)(years) PV x T 0.00 0.50 234567 0.00 1.00 0.00 1.50 0.00 2.00 0.00 2.50 0.00 3.00 7 0.00 3.50 8 0.00 4.00 9 0.00 4.50 10 0.00 5.00 11 0.00 5.50 12 0.00 6.00 13 0.00 6.50 14 0.00 7.00 15 0.00 7.50 16 0.00 8.00 17 0.00 8.50 18 0.00 9.00 19 20 0.00 9.50 20 104.13 0.00 10.00 D= 0.00 0 0.00 0.00 = #DIV/0! years