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Two years ago Gadget Geek Inc. (GG) issued a high-yield (or junk) bond with a coupon rate of 17%, paying semiannual coupons. When originally issued
Two years ago Gadget Geek Inc. (GG) issued a high-yield (or junk) bond with a coupon rate of 17%, paying semiannual coupons. When originally issued the bond was sold at par and had four years until maturity. Currently, GG bonds have a yield-to-maturity of 25%, and the next coupon payment is in six month from today. 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% and 20 months until maturity? (Report a negative number if GG has the lower duration.)
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