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  3. 4. bond duration 1. 2. 3. step: 1 of 3 investors u

4. Bond duration 1. 2. 3. STEP: 1 of 3 Investors use a bond's price...

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4. Bond duration 1. 2. 3. STEP: 1 of 3 Investors use a bond's price elasticity as a measure of its sensitivity to changes in interest rates; however, an alternative measure that is often used is bond duration, which measures the life of a bond on a present value basis. Suppose you have a bond with a $1,000 par value, a 9 percent coupon rate (that pays interest annually), three years to maturity, and a 9 percent yield to maturity. The bond's duration is: 2.373 years 2.538 years 2.759 years 3.035 years

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