Consider a Security with a Face Value of $100 000

question 52

Multiple Choice

Consider a security with a face value of $100 000 to be repaid at maturity. The maturity of the security is 3 years. The coupon rate is 9 per cent p.a. and coupon payments are made semi-annually. The current discount rate is 12 per cent p.a. What is the security's duration (round your answer to two decimals) ?

• A) 2.68 years
• B) 2.68 half-years
• C) 3 years
• D) 0.38 years

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Definitions:

Nurture

The influence of environmental factors and experiences on the development of an individual's physical and psychological attributes.

Discontinuities

Breaks or disruptions in a normally continuous process or sequence, leading to sudden changes rather than gradual developments.

Nature

The collective term for the physical aspects of the earth, including flora, fauna, geographical features, and natural occurrences, distinct from human-made elements or inventions.

Passive

Accepting or allowing what happens or what others do, without active response or resistance.