A bond has 4 years to maturity, a coupon of 3 percent paid annually and currently sells at par. What is the duration of the bond?
A) 3.83 years
B) 4.30 years
C) 3.91 years
Duration = [1(3)/(1.03) + 2(3)/(1.03)2 + 3(3)(/1.03)3 + 4(103)/(1.03)4]/100
Duration = [2.91 + 5.66 + 8.24 + 366.06]/100
Duration = 3.83 years
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