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:

Producers of Cheese

Businesses or individuals that manufacture cheese, involving the processing of milk and employing various techniques to achieve distinct flavors and textures.

Public Transportation

A system of vehicles such as buses and trains that operate at regular times on fixed routes and are available for use by the general public.

Core Manufacturing Firms

Companies that are central to the manufacturing sector, producing essential goods required by various industries.

Basic Services

Essential services required to meet basic human needs, including water, sanitation, electricity, healthcare, and education.