1, Find the duration of a 5.4 % coupon bond making semiannually coupon payments if it has 3 years until maturity and has a yield to maturity of 5.4%. What is the duration if the yield to maturity is 9.0%?
2. You will be paying $11500 a year in tuition expenses at the end of the next 2 years. Bonds currently yield 10%
a. What is the present value and duration of your obligation?
b. What maturity zero-coupon bond would immunize your obligation?