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

question 29

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 Modified Duration for Bond A.

• A) 0.98
• B) 1.79
• C) 1.90
• D) 1.93
• E) 2.31

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Definitions:

Microwave

Electromagnetic waves with frequencies between 300 MHz and 300 GHz, used in telecommunications, cooking, and radar technology.

Radio

A technology that uses radio waves to transmit and receive sound and other types of information.

Fiber

A type of material used in making textiles or a dietary component found in foods, or in technology, thin strands of glass or plastic used in fiber-optic communications.

LEO

Stands for Low Earth Orbit, which is the region of space around Earth at altitudes between 160 to 2,000 kilometers, used by satellites for a variety of applications.