If investors holding our 4-year bonds (Bond #1) receive interest income annually for four years, plus the face value of the bonds at maturity, a.If the expected rate of return on our bonds is 10%, what is the duration of Bond #1? given the following projected income stream for Bond #1 Year coupon interest face value ($) 1 100 2 100 3 100 4 100 1,000 total 400 1,000 income in year 4

EBK CONTEMPORARY FINANCIAL MANAGEMENT
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Chapter5: The Time Value Of Money
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.If investors holding our 4-year bonds (Bond #1) receive interest income annually for four years, plus the face value of the bonds at maturity,

a.If the expected rate of return on our bonds is 10%, what is the duration of Bond #1?

given the following projected income stream for Bond #1

Year          coupon interest        face value ($)

1              100

2               100

3               100

4                100                         1,000

 

total         400                            1,000 

income in year 4

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