NBP Sarmaya Izafa Fund is attempting to balance one of the bond portfolios under its management. The fund has identified three bonds which have five-year maturities and which trade at a YTM of 9 percent. The bonds differ only in that the coupons are 7 percent, 9 percent, and 11 percent.

1. What does the concept of duration mean in context of security valuation?
2. On what factors duration of a bond depends and what relation duration has with those factors?
3. Calculate the duration of the tree bonds as described in para above.
4. Plot the relation between duration and coupon rate.