The formula for the duration of a perpetual bond which makes an equal payment each year in
Question:
The formula for the duration of a perpetual bond which makes an equal payment each year in perpetuity is (1 + yield)/yield. If bonds yield 5 percent, which has the longer duration—a perpetual bond or a 15-year zero-coupon bond? What if the yield is 10 percent?
PerpetuityPerpetuity refers to payments that are made without an end or maturity date. A perpetuity is classified as an annuity, which is something that earns a dividend or receives a payment at a regularly scheduled interval, generally yearly. So, how...
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 91% (12 reviews)
The duration of a perpetual bond is 1 yieldyield The duration of a perpetual bond with a yiel...View the full answer
Answered By
Aysha Ali
my name is ayesha ali. i have done my matriculation in science topics with a+ . then i got admission in the field of computer science and technology in punjab college, lahore. i have passed my final examination of college with a+ also. after that, i got admission in the biggest university of pakistan which is university of the punjab. i am studying business and information technology in my university. i always stand first in my class. i am very brilliant client. my experts always appreciate my work. my projects are very popular in my university because i always complete my work with extreme devotion. i have a great knowledge about all major science topics. science topics always remain my favorite topics. i am also a home expert. i teach many clients at my home ranging from pre-school level to university level. my clients always show excellent result. i am expert in writing essays, reports, speeches, researches and all type of projects. i also have a vast knowledge about business, marketing, cost accounting and finance. i am also expert in making presentations on powerpoint and microsoft word. if you need any sort of help in any topic, please dont hesitate to consult with me. i will provide you the best work at a very reasonable price. i am quality oriented and i have 5 year experience in the following field.
matriculation in science topics; inter in computer science; bachelors in business and information technology
_embed src=http://www.clocklink.com/clocks/0018-orange.swf?timezone=usa_albany& width=200 height=200 wmode=transparent type=application/x-shockwave-flash_
4.40+
11+ Reviews
14+ Question Solved
Related Book For
Principles of Corporate Finance
ISBN: 978-0072869460
7th edition
Authors: Richard A. Brealey, Stewart C. Myers
Question Posted:
Students also viewed these Corporate Finance questions
-
The duration of a bond which makes an equal payment each year in perpetuity is (1 + yield)/yield. Prove it.
-
The duration of a bond that makes an equal payment each year in perpetuity is (1 + yield)/ yield. Prove it.
-
A Hydrogen atom has one proton in the nucleus and one electron in the shell. In a classic model of the atom, in a certain state, this electron is in a circular orbit around the nucleus with an...
-
Is it correct to say that a transformer boosts electric energy? Defend your answer.
-
A total of 940 healthy, pregnant women between 20 and 34 years of age participated in a study. Their lengths (in days) of pregnancy are approximately normally distributed (see the normal curve in...
-
A comparative balance sheet for Cirrus Corporation is provided in the Working Papers. The income statement for the current year indicates that net income was \($20,900.00\) and the depreciation...
-
The inverse demand for a homogeneous- product Stackelberg duopoly is P 16,000 4Q. The cost structures for the leader and the follower, respectively, are CL(QL) = 4,000QL and CF (QF) = 6,000QF. a....
-
Festivus Company has working capital of $145,080 on December 30. On December 31 it has the following transactions: 1) An account payable for $10,000 is paid off 2) An account receivable of $1,000 is...
-
[5] A marksman is firing a pistol at a 5 cm diameter, circular bullseye some distance away. The center of the target is considered (0, 0). This marksman pulls a little to the right (positive x) and a...
-
In Section 24.3 we stated that in 2001 the duration of the 4 5/8s of 2006 was 4.36 years. Construct a table like Table 24.2 to show that this is so. Proportion of Total Value (PV(C,J/V) Proportion of...
-
You have just been fired as CEO. As consolation the board of directors gives you a five year consulting contract at $150,000 per year. What is the duration of this contract if your personal borrowing...
-
Tomasco, Inc., began operations in January 2003 and had the following reported net income or loss for each of its five years of operations: 2003 $ 150,000 loss 2004 130,000 loss 2005 120,000 loss...
-
Could you elucidate the nuanced dialectics between Moore's Law and Kondratiev waves within the overarching framework of the technology cycle, unraveling the intricate mechanisms by which exponential...
-
The set of all positive primes less than -1 but greater than 100. (ii) The set of all real-valued solutions for the equation x-x+x-1=0. (iii) The set of all integers divisible by 7 in the range [0,...
-
Swifty Enterprises sold $740,000 of accounts receivable to Wildhorse Factors, Inc. on a without recourse basis under IFRS, as the risks and rewards have been transferred to Wildhorse. The transaction...
-
Tax Evaluation - Beth Johnson's Income from Partnership This activity provides hands - on experience in assessing and reporting partnership incomes, offering insights into the intricacies of tax...
-
How does the intricate interplay between technological obsolescence, innovation diffusion, and disruptive paradigms delineate the contours of the contemporary technology cycle, and what implications...
-
Create a portfolio of at least two options on the same futures you selected and evaluate the position in terms of the position's OPM value, delta, gamma, and theta. On the OVME screen, click the +...
-
The Alert Company is a closely held investment-services group that has been very successful over the past five years, consistently providing most members of the top management group with 50% bonuses....
-
One of the possible initial steps in the formation of acid rain is the oxidation of the pollutant SO 2 to SO 3 by the reaction: Calculate G rxn at 25 C and determine whether the reaction is...
-
You are discussing real options with a colleague. During the discussion, the colleague states, Real option analysis makes no sense because it says that a real option on a risky venture is worth more...
-
You are discussing real options with a colleague. During the discussion, the colleague states, Real option analysis makes no sense because it says that a real option on a risky venture is worth more...
-
Your company currently uses traditional capital budgeting techniques, including net present value . After hearing about the use of real option analysis, your boss decides that your company should use...
-
Modi Corp has 1 , 4 0 0 , 0 0 0 shares outstanding, and the stock is currently trading at $ 1 6 . 0 0 per share. The company has two different bonds outstanding. First, it has 4 , 0 0 0 zero coupon...
-
The manager of a computer retails store is concerned that his suppliers have been giving him laptop computers with lower than average quality. His research shows that replacement times for the model...
-
Dentro del tratamiento contable de las provisiones, estas se caracterizan por: Grupo de opciones de respuesta La entidad est en la potestad de acuerdo al criterio de la administracin de crear o no...
Study smarter with the SolutionInn App