Exhibit 19.10 Use the Information Below for the Following Problem(S)

question 68

Multiple Choice

Exhibit 19.10
Use the Information Below for the Following Problem(S)
You are creating a portfolio that consists of the following two bonds. Bond A pays an annual 7% coupon, matures in two years, has a yield to maturity of 8%, and a face value of $1,000. Bond B pays an annual 8% coupon, matures in three years, has a yield to maturity of 9%, and a face value of $1,000.
-Refer to Exhibit 19.10.Calculate the Macaulay Duration for Bond B.

• A) 1.44
• B) 2.47
• C) 2.55
• D) 2.70
• E) 2.78

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Definitions:

Relative Size

Pertains to the comparative magnitude or extent of something in relation to something else.

Identical Twins

Twins who are genetically identical, resulting from the fertilization of a single egg that then splits into two.

Viewer Perception

The process by which viewers interpret and make sense of visual stimuli or media content based on their personal background and experiences.

Texture Gradients

Are perceptual cues that suggest depth by illustrating how rough or smooth objects appear as they recede into the distance.