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1. Today is 1 January 2018. Jackson who is aged 80 has a portfolio which consists of three different types of financial instruments (henceforth referred to as instrument A, instrument Band instrument C.

• InstrumentAis a zero-coupon bond with a face value of 100. This bond matures at par. The maturity date is 1 July 2023.

• Instrument Bis a Treasury bond with a coupon rate of j2= 3.45% p.a. and face value of 100. This bond matures at par. The maturity date is 1 July 2020.

• Instrument Cis a Treasury bond with a coupon rate ofj2= 2.85% p.a. and face value of 100. This bond matures at par. The maturity date is 1 January 2021.

a. What is the duration of a instrument A? Express your answer in terms of years and round your answer to three decimal places. Assume the yield rate isj2= 5% p.a.

1. What is the duration of instrument B? Express your answer in terms of years and round your answer to three decimal places. Assume the yield rate is j2= 5% p.a.

2. What is the duration of instrument C? Express your answer in terms of years and round your answer to three decimal places. Assume the yield rate is j2= 5% p.a.