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:

Origin

The point or place where something begins, arises, or is derived.

Antagonist

In pharmacology, a substance that acts against and blocks an action by binding to a receptor without activating it, effectively preventing the natural ligand or agonist from exerting its effect.

Tendon

A cord-like, fibrous tissue that connects muscle to bone.

Aponeurosis

A fibrous sheet or flat, expanded tendon that attaches muscles to the parts they move.