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Two years ago, Gadget Geek Inc. (GG) issued a high-yield bond with a coupon rate of 15%, paying semi-annual coupons. When originally issued the bond
Two years ago, Gadget Geek Inc. (GG) issued a high-yield bond with a coupon rate of 15%, paying semi-annual coupons. When originally issued the bond was sold at par and had four years until maturity. Currently, GG bonds have a yield-tomaturity of 20%. By how much is the duration of GG bonds higher than that of an AAA rated zero-coupon bond with an interest rate of 7% (EAR) and 23 months until maturity? (Report a negative number if GG has the lower duration of the two.)
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