Calculate the Duration of a 4-Year $1,000 Face Value Bond

question 7

Multiple Choice

Calculate the duration of a 4-year $1,000 face value bond, which pays 8% coupons annually throughout maturity and has a yield to maturity of 9%.

• A) 3.29 years
• B) 3.58 years
• C) 3.69 years
• D) 3.89 years
• E) 4.00 years

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Definitions:

Specialization

A focus or concentration on a particular area of expertise, leading to increased efficiency and skill in that area.

Total Cost of Ownership

The comprehensive assessment of the direct and indirect costs associated with the purchase and operation of a product or system over its entire lifespan.

Centralization

A process where decision-making authority is concentrated at a single point in the organization, often at the top management level.

Buying Specialization

A procurement approach where purchasing responsibilities are divided amongst team members based on specific categories of goods or services.