Exhibit 16-10 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)

question 1

Multiple Choice

Exhibit 16-10
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)
You are creating a portfolio that consists of the following two bonds. Bond A pays an annual 7% coupon, matures in two years, has a yield to maturity of 8%, and a face value of $1,000. Bond B pays an annual 8% coupon, matures in three years, has a yield to maturity of 9%, and a face value of $1,000.
-Refer to Exhibit 16-10. Calculate the Macaulay Duration for Bond B.

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

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Definitions:

Initiation Rite

A ceremony, ritual, or event marking the entrance or acceptance of an individual into a group or society.

Group Prototypicality

The extent to which a member of a group represents the average or typical attributes, behaviors, or characteristics of that group.

Social Loafing

A scenario where members of a team contribute less effort to reach a target than they would if working individually.

Task Attractiveness

The degree to which an individual is drawn to or motivated by a specific task, often influenced by the nature of the task itself and the individual's personal interests.