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:

Cerebrovascular Accident (CVA)

A medical term for a stroke, an event leading to brain damage caused by a change in the brain's blood flow or the rupture of blood vessels.

Syncope

A temporary loss of consciousness usually related to insufficient blood flow to the brain, often called fainting.

Hemorrhage

An excessive or uncontrolled bleeding, either internally or externally, due to ruptured blood vessels.

Autopsy

A post-mortem examination of a body to determine the cause of death or the extent of disease.