What Is the Duration of the Following Portfolio

question 15

Essay

What is the duration of the following portfolio?
i. Long a 1.5-year zero coupon bond.
ii. Short a 2-year ?xed coupon bond paying 1% quarterly.

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Definitions:

Overdue

Overdue signifies being past the time or date by which a task, obligation, or payment was due to be completed or made.

Principal

In finance, the original sum of money borrowed or invested, excluding any interest or dividends. In law, the primary party who authorizes another (the agent) to act on their behalf.

Installments

Payments divided over a period of time for a debt or purchase, rather than paying the total amount upfront.

Default

Failing to fulfill a legal obligation, such as not making a scheduled payment on a loan.