9. A bond pays $50 at the end of each year for three years. The interest...

Question

Question

9. A bond pays $50 at the end of each year for three years. The interest rate is 10%. The duration of that bond is

a. 3 years

b. 2 years

c. 1 year

d. between 1 and 2 years

e. between 2 and 3 years

Why is the answer d?

Answer 1

Answer #1

Since Maculay Duration is found out to be 1.94 hence hence duration is between 1 and 2 years

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Answer 2

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