USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 80

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Consider two bonds: both pay annual interest. Bond Y has a coupon of 6 percent per year, maturity of five years, yield to maturity of 6 percent per year, and a face value of $1000. Bond X has a coupon of 7 percent per year, maturity of 10 years, yield to maturity of 4 percent per year, and a face value of $1000.
-Refer to Exhibit 13.13. Calculate the modified duration for Bond Y.

• A) 7.8
• B) 4.22
• C) 4.34
• D) 7.5
• E) 9.8

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Definitions:

Marginal Revenue

The additional income generated from the sale of one more unit of a product or service.

Total Product

The overall quantity of goods or services produced by a firm within a specific period.

Average Variable Costs

The total variable costs of production divided by the quantity of output produced.

Workers

Individuals engaged in any form of employment, contributing labor for the production of goods or services.