USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 19

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
You are creating a portfolio that consists of the following two bonds. Bond A pays an annual 7 percent coupon, matures in two years, has a yield to maturity of 8 percent, and a face value of $1,000. Bond B pays an annual 8 percent coupon, matures in three years, has a yield to maturity of 9 percent, and a face value of $1,000.
-Refer to Exhibit 13.14. Calculate the Modified Duration for Bond B.

• A) 1.44
• B) 2.47
• C) 2.55
• D) 2.70
• E) 2.78

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Definitions:

Capital Balances

The amounts of money that individuals or entities have invested in a company, reflected in their ownership or partnership accounts.

Cash Distribution

The allocation of funds or payment of dividends to a company's shareholders typically in the form of cash.

Bonus

An additional compensation given to employees as a reward for their performance or as part of their benefits package.

Capital Balances

signify the amount of money that stakeholders have invested in a company, often reflected in the equity or capital accounts on the balance sheet.