Today is $1$ July $2021.$ Joan has a portfolio which consists of two different types of financial instruments $($henceforth referred to as instrument A and instrument B$).$ Joan purchased all instruments on $1$ July $2017$ to create this portfolio and this portfolio is composed of $306$ units of instrument A and $466$ units of instrument B$.$

Instrument A is a zero$-$coupon bond with a face value of $100.$ This bond matures at par. The maturity date is $1$ January $2030.$

Instrument B is a Treasury bond with a coupon rate of j$2=3\mathrm{.}13\%$ p$.$a$.$ and face value of $100.$ This bond matures at par. The maturity date is $1$ January $2024.$

$($c$)$ What is the current duration of instrument B$?$ Express your answer in terms of years and round your answer to three decimal places. Assume the yield rate is j$2=4\mathrm{.}32\%$ p$.$a$.$

Question $7$Answer

a$.$

$2\mathrm{.}884$

b$.$

$5\mathrm{.}769$

c$.$

$4\mathrm{.}846$

d$.$

$2\mathrm{.}423$