What Is the Duration of an 8 Percent Annual Payment

question 19

Multiple Choice

What is the duration of an 8 percent annual payment two-year note that currently sells at par?

• A)2 years.
• B)1.75 years.
• C)1.93 years.
• D)1.5 years.
• E)1.97 years.

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Definitions:

Sampling Distribution

The probability distribution of a given statistic based on a large number of samples drawn from a specific population, used to estimate population parameters.

Sample Proportion

The sample proportion is a statistic that estimates the proportion of elements in a population that have a certain characteristic, based on a sample from that population.

Population Proportion

A measure that represents the fraction of members in a population that have a particular property or attribute.

Binomial Random Variable

A type of random variable that takes on a fixed number of trials, each with two possible outcomes.