Compute the Duration of an 8%, 5-Year Corporate Bond with a Par

question 57

Multiple Choice

Compute the duration of an 8%, 5-year corporate bond with a par value of $1000 if yield to maturity is 10%.

• A)3.92
• B)4.28
• C)4.55
• D)5.00

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Definitions:

Ownership Claim

A declaration or assertion of legal rights to possess and use property.

Note Payable

A written promise to pay a specific amount of money, usually with interest, by a certain date.

Money Borrowed

Funds that have been provided by one party to another under the condition that it will be returned, often with interest.

Monetary Unit Assumption

An accounting principle that assumes transactions and events can be expressed in monetary units for recording and reporting.