Proof the Following Three Propositions Using a Simple Numerical Example

question 28

Essay

Proof the following three propositions using a simple numerical example for each of the cases.
a. The duration of an asset or liability with intervening cash flows between issue and maturity is smaller than its maturity.
b. The duration of an asset or liability without any intervening cash flows between issue and maturity equals its maturity.
c. Despite the fact that perpetuities such as consol bonds have no maturity, it is possible to calculate their duration.

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Definitions:

Revised Secularization Thesis

The revised secularization thesis holds that worldly institutions break off from the institution of religion over time. As a result, religion governs an ever smaller part of most people’s lives and becomes largely a matter of personal choice.

Religious Bodies

Organized groups of individuals who share the same religious beliefs and practices, often structured with a hierarchy and common rituals.

Church Doctrine

The official teachings and beliefs of a religious institution, often based on sacred texts and traditions.

Breaking Away

The act of distancing oneself from previous affiliations or conventions, seeking independence or a new direction.