A Bond with Duration of 10 Years Has a Yield

question 42

Multiple Choice

A bond with duration of 10 years has a yield to maturity of 10 percent. This bond's volatility (modified duration) is

• A)9.09 percent.
• B)6.80 percent.
• C)14.6 percent.
• D)10.00 percent.

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Definitions:

Net Income

A company's financial gain after removing expenses and tax liabilities from its total revenue.

Gross Profit Rate

Gross profit expressed as a percentage, by dividing the amount of gross profit by net sales.

Common Stockholders' Equity

Common Stockholders' Equity represents the interest of common shareholders in a company, calculated as the difference between total assets and total liabilities, including preferred equity.

Inventory Turnover

An indicator of the frequency with which a business's stock is sold and replenished within a given timeframe, demonstrating the effectiveness of how inventory is handled.