What Is the Duration of a 5-Year Par Value Zero

question 17

Multiple Choice

What is the duration of a 5-year par value zero coupon bond yielding 10 per cent annually?

• A) 0.50 years
• B) 2 years
• C) 4.40 years
• D) 5 years

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Definitions:

Direct Labor-Hours

A measure of the work time spent by employees directly involved in the production of goods or services.

Machine-Hours

A measurement of production output or activity based on the number of hours machines are operated in the manufacturing process.

Machining Department

A specific division within a manufacturing plant where machining, a process of shaping metal or other materials, is carried out.

Predetermined Overhead Rate

A rate calculated before a period begins, used to allocate indirect costs to products or services based on a consistent activity measure.