Assignment:
Consider three Treasury bonds each of which has a 10 percent semiannual coupon and trades at par.
Requirement:
Question 1: Calculate the duration for a bond that has a maturity of four years, three years, and two years?
Question 2: What conclusions can you reach about the relationship of duration and the time to maturity? Plot the relationship.
Note: Please provide equation and explain comprehensively and give step by step solution.