Q10. Consider a discount bond with a principal payment of $1,000, a price of $900, and a YTM of E. 5 years 5.4093%. Assume annual compounding, what's the duration of the bond? D. 4 years A. 1 year В. 2 уears С. З уears

Q10. Consider a discount bond with a principal payment of $1,000, a price of $900, and a YTM of E. 5 years 5.4093%. Assume annual compounding, what's the duration of the bond? D. 4 years A. 1 year В. 2 уears С. З уears

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter12: Investing In Stocks And Bonds

Section: Chapter Questions

Problem 6FPE

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Concept explainers

Loanable Funds Theory

The loanable funds theory is a neoclassical theory that determines the interest rate where the demand for loanable investments and supply of loanable funds intersect. To determine the interest rate, this theory employs linear regression and a demand curve. At the equilibrium point, demand for borrowings and demand for the issuance of borrowing funds are inextricably linked. This point of equilibrium should equalize demand and the supply of money available for borrowing.

Question

D4)

Q10. Consider a discount bond with a principal payment of S1,000, a price of $900, and a YTM of
E. 5 years
5.4093%. Assume annual compounding, what's the duration of the bond?
D. 4 years
A. I year
B. 2 years
C. 3 years

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