Bailey Co. has leased a refrigeration unit from Hallogren Company (lessor). The lease agreement is for 16 months and does not include a purchase option. The fair value of the refrigeration unit is $4,000. Under what may the lessee elect not to recognize the right-of-use asset and lease liability?

Given: 
Duration = 10 years
 Yield to maturity = 10%  
To find: Bond volatility. 
 Solution: 
 Volatility (in percentage) = Duration / (1+yield) 
 Now putting values in the formula,
 10 / (1+10%) 
 10/ (1+10/100)
 10/(1+0.1)
 10/1.1 = 9.09%
  So, bond volatility is 9.09%.