Asked by
moses kemboi
on Dec 08, 2024
Verified
Consider a four yearannual bond paying a 7% coupon, with a yield to maturity of 6.0%. What is the duration of the bond?
A) 3.631
B) 3.785
C) 3.814
D) 3.965
Coupon Rate
The annual interest rate paid by bond issuers on the bond's face value.
Duration
A financial metric that indicates the sensitivity of a bond's price to changes in interest rates, commonly measured in years.
- Familiarize yourself with the idea of bond duration and the steps involved in its calculation.
- Examine the effect of yield to maturity on the longevity and value of bonds.
Verified Answer
MR
Learning Objectives
- Familiarize yourself with the idea of bond duration and the steps involved in its calculation.
- Examine the effect of yield to maturity on the longevity and value of bonds.