Consider a Security with a Face Value of $100 000

question 32

Multiple Choice

Consider a security with a face value of $100 000, which is to be repaid at maturity. The security pays an annual coupon of 8 per cent and has a maturity of three years. The current discount rate is 10 per cent. What is the security's duration (round to two decimals) ?

• A) 2.78 years
• B) 3 years
• C) 0.36 years
• D) 1.94 years

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Definitions:

Storming

A phase in group development characterized by conflict and competition as team members clarify their roles and expectations.

Process Gains

Factors that contribute to team effectiveness.

Synergy

The concept that the total amount of work produced by a team is greater than the amount of work produced by individual members working independently.

Sequential Interdependence

A work process situation where the output of one task becomes the input for the next task, requiring coordination and timing between tasks.