Bond 1 has a maturity of 9 years, zero coupon rate, FV of 1000 and IR of 2.7%.Bond 2 has a has a maturity of 10 years, 2.35%coupon rate, FV of 1000 and IR of 2.7%.
Bond 3 has a maturity of 11 years, 4.9% coupon rate, FV of 1000 and IR of 2.7%. 1. Calculate the duration 2. Determine the number of Bonds needed to pay at year 9 the amount of $1,000,000 for each bond. Show that your bonds will be immune to changes in rates (show the rate and values for each bond using 3 lower and 3 higher rates).
Show your work.