Part 1 (so make a note of the answer to this question as you will need it to answer Part 3)

What is the duration of a two year bond that pays an annual coupon of 10% and has a current yield to maturity of 12%? Use $1,000 as the face value. (round to 4 decimals)

Part 2 (so make a note of the answer to this question as you will need it to answer Part 3)

What is the duration of a two year zero coupon bond that is yielding 11.5%? Use $1,000 as the face value.

This question uses your answers to Part 1 and Part 2 (Part 1 wasa two year bond that pays an annual coupon of 10% and has a current yield to maturity of 12% and Part 2 wasduration of a two year zero coupon bond that is yielding 11.5%?

Given these answers, how does duration differ from maturity?

	A.	Duration will always be lower than the number of years to maturity for positive interest bearing bonds
	B.	Duration will equal maturity
	C.	Duration will always be higher than the number of years to maturity for positive interest bearing bonds
	D.	all of the above can be true