Question 2: BBC has just issued a new annual coupon bond that has 5 years to maturity, a coupon rate of 11% and trades at par at a price of $1000. You may assume that the yield-curve is flat.

a) Compute the duration of the BBC bond.

Here is the solution (please use the following method to find answer): see photo attached

Problem 2. wa) Compute Duration (not modified duration as given in the slides, recall it is simply the prosent value weighted time to wait for a payment or equivalently) - Du