###
**CFA Practice Question**

A Zero-Coupon bond issue with 10 years to maturity has a face value of $1 million. The YTM is 5%. The dollar duration of the bonds is:

A. $61,391.33

B. $100,000

C. $613,913.25

**Explanation:**The dollar duration is the approximate change in price for a 1% change in YTM. Dollar Duration = Duration * Price / 100

###
**User Contributed Comments**
3

User |
Comment |
---|---|

Sandar |
need more explanation pls |

Jlinne |
Duration for Zeroes = Maturity. So for this problem duration = 10 AN calculated bond price using annual interest rates instead of semi-annual for some reason even though semi-annual compounding is usually used for zeroes. n10 i/y5 pmt0 fv 10m cpt pv pv = 613,913.25 10* (613,913.25/100) = 61,391.33 |

HolzGe1 |
Funny, I thought a zero-bonds MacDur = Time-to-maturity. So ModDur = MacDur/(1+r) = 10/(1.05) = 9.52. So shouldn't it be 9.52 * 613,913.25 / 100 = 58,444.54 ? |