Consider a Bond with a Face Value of $1,000, an Annual

question 46

Multiple Choice

Consider a bond with a face value of $1,000, an annual coupon rate of 6 percent, a yield to maturity of 8 percent, and 10 years to maturity. This bond's duration is

• A)8.7 years.
• B)7.6 years.
• C)10.0 years.
• D)6.5 years.

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Definitions:

Innovation

The first commercially successful introduction of a new product, use of a new method of production, or creation of a new form of business organization.

Invention

The conception of a new product or process combined with the first proof that it will work.

Diffusion

The spread of an innovation through its widespread imitation.

Technological Advance

(1) An improvement in the quality of existing products, the invention of entirely new products, or the creation of new or better ways of producing or distributing products. (2) Any improvement in the methods by which resources are combined such that the same quantity of inputs can be made to yield a combination of outputs that is preferred to any combination of outputs that was previously possible.