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Duration of a 3-year Bond

What is the duration of a bond with three years to maturity and a coupon of 6 percent paid annually if the bond sells at par? (Round your answer to 5 decimal places. (e.g., 32.16161)

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Dear Student:

Duration measures how sensitive the bond is to changes in the market interest rate.

The formula for duration and the calculations are in the attached word file in a clear form.

D=(C[((1+r)^(N+1)-(1+r)-R*N)/(r^2 (1+r)^N )]+ (F*N)/(1+r)^N )/P_o

Where C ...

Solution Summary

This solution shows the calculation of duration for a 3-year bond for a bond selling at par, using the duration formula.