I am writing a program for a college finance class. I amtrying to calculate bond

Question

I am writing a program for a college finance class. I amtrying to calculate bond duration using this formula. Dur = ( (coup payment) / (1 + currentmarket rate) ^ n   +   (Par + last couppayment) / (1 + current market rate) ^ n ) / currentbond price The formula works for then annual periods ( 5 years) and semiannuals periods ( 5 1/2 years), but I cannot figureout have to use the formula to calculate duration for time periodssuch as 5 years and 2 months. Dave I am writing a program for a college finance class. I amtrying to calculate bond duration using this formula. Dur = ( (coup payment) / (1 + currentmarket rate) ^ n   +   (Par + last couppayment) / (1 + current market rate) ^ n ) / currentbond price The formula works for then annual periods ( 5 years) and semiannuals periods ( 5 1/2 years), but I cannot figureout have to use the formula to calculate duration for time periodssuch as 5 years and 2 months. Dave

Explanation / Answer

You just have to convert the 2 months into years. Since thereare 12 months in total in a year, it's x/12 where x is the amountof months. In your case, x = 2; 2/12 = 1/6 = 0.166667 5 years + 2 months = 5 years + 0.1666667 years =5.166667

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