Exhibit 16-8 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)

question 54

Multiple Choice

Exhibit 16-8
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)
Consider two bonds, both pay annual interest. Bond C has a coupon of 6% per year, maturity of 5 years, yield to maturity of 6% per year, and a face value of $1000. Bond D has a coupon of 8% per year, maturity of 15 years, yield to maturity of 6% per year, and a face value of $1000.
-Refer to Exhibit 16-8. Calculate the modified duration for Bond D.

• A) 9.5
• B) 9.8
• C) 9.2
• D) 15
• E) None of the above

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Definitions:

Gonads

The primary reproductive organs that produce gametes; ovaries in females and testes in males, also responsible for producing sex hormones.

Pituitary Hormones

Hormones released by the pituitary gland, which regulate various bodily functions and processes including growth, metabolism, and reproduction.

Sex Hormones

Chemical substances produced by the body that regulate the development and functioning of reproductive organs and secondary sexual characteristics.

Low-income Households

Households with total income below a certain threshold defined by national statistics, often associated with insufficient resources to meet basic living expenses.