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

question 5

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 B.

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

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