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Two bonds are available for purchase in the financial markets. The first bond is a 2-year, $1,000 bond that pays an annual coupon of 10

Two bonds are available for purchase in the financial markets.  The first bond is a 2-year, 

$1,000 bond that pays an annual coupon of 10 percent.  The second bond is a 2-year, 

$1,000, zero-coupon bond. 

 

  a.  What is the duration of the coupon bond if the current yield-to-maturity (YTM) is 8 

percent? 10 percent?  12 percent?  (Hint: You may wish to create a spreadsheet 

program to assist in the calculations).

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