Guess the duration of the following investment Is it less than two years, two to three years, three to four years, or greater than four years After your guess, use a discount rate of 6 percent and calculate the PV of the cash flows and then duration Years from now 1 2 3 4 Cash flow $ 0 $ 1,000 $ 5,...

The price of the investment ...

Guess the duration of the following investment. Is it less than two years, two to three years,

Question:

Guess the duration of the following investment. Is it less than two years, two to three years, three to four years, or greater than four years? After your guess, use a of 6 percent and calculate the PV of the cash flows and then duration.
Years from now 1 2 3 4
Cash flow $ 0 $ 1,000 $ 5,000 $ 2,000
Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...