Calculate the Modified Duration of a Two-Year Corporate Loan Paying

question 53

Multiple Choice

Calculate the modified duration of a two-year corporate loan paying 6 percent interest annually.The $40,000,000 loan is 100 percent amortizing, and the current yield is 9 percent annually.

• A)2 years.
• B)1.91 years.
• C)1.94 years.
• D)1.49 years.
• E)1.36 years.

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Definitions:

Communal Culture

A social system or environment where the emphasis is on the collective well-being, sharing responsibilities, and making decisions for the common good rather than individual interests.

Knowledge Sharing

The exchange of skills, information, and experience among individuals or groups, often aimed at improving efficiency, productivity, and innovation.

Fragmented Culture

An organizational culture characterized by disunity and an absence of shared beliefs or values among its members.

Disconnection

The process or state of being detached or separated from something.