Consider Two Bonds, Both Pay Annual Interest

question 10

Multiple Choice

Consider two bonds, both pay annual interest. Bond C has a coupon of 6% per year, maturity of 5 years, yield to maturity of 6% per year, and a face value of £1000. Bond D has a coupon of 8% per year, maturity of 15 years, yield to maturity of 6% per year, and a face value of £1000. Calculate the modified duration for Bond C.

• A) 4.47
• B) 4.22
• C) 4.34
• D) 5
• E) None of the above

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