Consider a Security with a Face Value of $100 000

Multiple Choice

Consider a security with a face value of $100 000, which is to be repaid at maturity. The security pays an annual coupon of 8 per cent and has a maturity of three years. The current discount rate is 10 per cent. What is the security's duration (round to two decimals) ?

A) 2.78 years
B) 3 years
C) 0.36 years
D) 1.94 years