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] 6. Consider a stream of n cash flows. Let CF; denote the dollar value of the ith cash flow, let t the time
] 6. Consider a stream of n cash flows. Let CF; denote the dollar value of the ith cash flow, let t the time (in years) at which it will be received and let PV (r) denote the present value of the stream given that all cash flows are discounted at the continuously compounded rate r. Prove that the duration of the stream is -PV'(r)/PV(r).
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We can prove that the duration D of a stream of n cash flows is PVr PVr using the following steps 1 Define Duration Duration D is the weighted average ...
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Foundations of Financial Management
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
10th Canadian edition
1259261018, 1259261015, 978-1259024979
