Today is 15 November 2022. Jean just purchased two Treasury bonds, henceforth referred to as bond A and bond B. Assume the yield rate for all these financial instruments is j2 = 3.93% p.a.

Bond A is a zero coupon with a face value of $100. The maturity date of this bond is 15 December 2022.

Bond B has the coupon rate of j2 = 3.74% p.a. and a face value of $100. The maturity date of this bond is 15 May 2025.

QUESTION 13 [3 marks] What is the modified duration of the bond B? Select the correct answer.

a. 4.82 years b. 2.41 years c. 4.73 years d. 2.36 years

QUESTION 14 [3 marks] Which of the following statement is correct?

a. The duration of bond A changes if its yield rate is higher. b. We do not need perform calculation to obtain the duration of Bond A.

c. Duration can not be used to quantify interest rate risk. d. None of above statement is correct.