What Is the Duration of an 8 Percent Annual Payment

question 19

Multiple Choice

What is the duration of an 8 percent annual payment two-year note that currently sells at par?

• A)2 years.
• B)1.75 years.
• C)1.93 years.
• D)1.5 years.
• E)1.97 years.

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Definitions:

Elasticity of Demand

A measure of how the quantity demanded of a good or service changes in response to a change in its price.

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a given price level in a specified time period.

Elastic

describes a situation where the quantity demanded or supplied changes significantly in response to price changes.

Total Revenue

The entire amount of income generated by the sale of goods or services before any expenses are deducted.