USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 61

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Consider two bonds: both pay annual interest. Bond C 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 D has a coupon of 8 percent per year, maturity of 15 years, yield to maturity of 6 percent per year, and a face value of $1000.
-Refer to Exhibit 13.12. Calculate the modified duration for Bond D.

• A) 9.5
• B) 9.8
• C) 9.2
• D) 15
• E) 17

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Definitions:

T Procedure

A statistical method used for hypothesis testing and constructing confidence intervals, especially useful when the sample size is small.

Equal Variances

A condition in which two or more groups have the same variance, often assumed in parametric tests comparing groups.

Pooled Two-sample T Procedure

A statistical method used to test if there is a difference between the means of two populations, assuming equal variances.

Alternative Hypothesis

A statement in hypothesis testing that is directly tested and suggests there is a statistically significant effect or difference.