DURATION PROBLEMS

DURATION PROBLEMS

CALCULATE THE DURATION FOR THE FOLLOWING:

1.         A 25-YEAR BOND, 2 YEARS TO MATURITY, PAYING A 11.45% COUPON,       AND YTM OF 12.5%

            A.        INTEREST PAYABLE ANNUALLY

 B.        INTEREST PAYABLE SEMI-ANNUALLY

            C.        INTEREST PAYABLE QUARTERLY

2.         A BOND WITH CURRENT YIELD=10.75% ON ISSUE DATE, MATURING IN     5 YEARS, IRR=8.57%

            A.        INTEREST PAYABLE ANNUALLY

            B.        INTEREST PAYABLE SEMI-ANNUALLY

3.         A BOND ISSUED ON APRIL 1, 1970 WITH 4 YEARS TO MATURITY,      PAYING $127.50 ANNUALLY, AND A REQUIRED RATE OF RETURN OF 9.23%

            A.        INTEREST PAYABLE ANNUALLY

            B.        INTEREST PAYABLE SEMI-ANNUALLY

4.         A BOND ISSUED ON JANUARY 1, 1980, MATURING JANUARY 1, 1995, WITH THE CURRENT APPROPRIATE INTEREST RATE OF 9.4%, PAYING     10.55% COUPON, AND IT IS NOW JANUARY 1, 1993

            A.        INTEREST PAYABLE ANNUALLY

            B.        INTEREST PAYABLE SEMI-ANNUALLY

5.         AN ANNUAL BOND WITH A CURRENT PRICE OF $1,170.5854, PAYING           COUPON OF 14.5%, MATURING IN 5 YEARS

DURATION PROBLEMS

CALCULATE THE DURATION FOR THE FOLLOWING:

1.         A 25-YEAR BOND, 2 YEARS TO MATURITY, PAYING A 11.45% COUPON,       AND YTM OF 12.5%

            A.        INTEREST PAYABLE ANNUALLY

 B.        INTEREST PAYABLE SEMI-ANNUALLY

            C.        INTEREST PAYABLE QUARTERLY

2.         A BOND WITH CURRENT YIELD=10.75% ON ISSUE DATE, MATURING IN     5 YEARS, IRR=8.57%

            A.        INTEREST PAYABLE ANNUALLY

            B.        INTEREST PAYABLE SEMI-ANNUALLY

3.         A BOND ISSUED ON APRIL 1, 1970 WITH 4 YEARS TO MATURITY,      PAYING $127.50 ANNUALLY, AND A REQUIRED RATE OF RETURN OF 9.23%

            A.        INTEREST PAYABLE ANNUALLY

            B.        INTEREST PAYABLE SEMI-ANNUALLY

4.         A BOND ISSUED ON JANUARY 1, 1980, MATURING JANUARY 1, 1995, WITH THE CURRENT APPROPRIATE INTEREST RATE OF 9.4%, PAYING     10.55% COUPON, AND IT IS NOW JANUARY 1, 1993

            A.        INTEREST PAYABLE ANNUALLY

            B.        INTEREST PAYABLE SEMI-ANNUALLY

5.         AN ANNUAL BOND WITH A CURRENT PRICE OF $1,170.5854, PAYING           COUPON OF 14.5%, MATURING IN 5 YEARS