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134

Which of the following is closest to the duration of a 2-year bond that pays a coupon of 8% per annum semiannually? The yield on the bond is 10% per annum with continuous compounding.

A.1.82

B.1.85

C.1.88

D.1.92

A.1.82

B.1.85

C.1.88

D.1.92

Answer: C

The duration of the bond is the weighted average of the times when cash flows are received with weights proportional to the present values of the cash flows.

The duration of the bond is the weighted average of the times when cash flows are received with weights proportional to the present values of the cash flows.

Flashcard info:

Author: CoboCards-User

Main topic: Finance & Investment

Topic: Derivatives

Published: 27.10.2015