The Duration of a Par-Valueannual Bond with a Coupon Rate

question 26

Multiple Choice

The duration of a par-valueannual bond with a coupon rate of 6.5% and a remaining time to maturity of 4 years is

• A) 3.65 years.
• B) 3.45 years.
• C) 3.85 years.
• D) 4.00 years.

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Definitions:

Distribution

In statistics, it refers to the way in which values of a variable or a set of variables are spread or dispersed across a range of values.

Magnitude

A quantitative measure of size or extent, often used in context to describe the importance or severity of a variable or event.

Correlation Coefficient

A numerical measure that indicates the extent of a linear relationship between two variables, ranging from -1 to 1.

Best Fitting Line

A line that best represents the relationship between variables in a scatter plot, minimizing the distances of the data points from the line.