Exhibit 18.3 Use the Information Below for the Following Problem(S)

question 69

Multiple Choice

Exhibit 18.3
Use the Information Below for the Following Problem(S)
A $1000 par value bond with 4 years to maturity and a 5% coupon has a yield to maturity of 6%. Interest is paid annually.
-Refer to Exhibit 18.3.Calculate the modified duration for the bond.

• A) 3.51 years
• B) 3.61 years
• C) 3.72 years
• D) 4.38 years
• E) 7.44 years

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Definitions:

Discretionary Spending

This refers to the portion of government spending that is decided through the annual appropriations process, covering non-essential services that do not include mandatory spending like Social Security and Medicare.

Federal Spending

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Indirect Taxes

Taxes levied on goods and services rather than on income or profits, such as sales tax or value-added tax (VAT).

Corporate Income Tax

A tax imposed on the net income (profit) of corporations, calculated as a percentage of their net income.