Consider a perpetuity that pays $1000 per year forever. Suppose the yield on this perpetuity is 5%. What is its duration?

A)infinity

B)1000 years

C)21 years

D)5 years

A 3-year bond pays annual coupons at 5%. Its par value is $1000. If its yield to maturity is 4%, what is its duration and modified duration, respectively?

A)Duration = 5 years and modified duration = 4.6 years.

B)Duration = 3 years and modified duration = 3.2 years.

C)Duration = 2.86 years and modified duration = 2.75 years.

D)Duration = 2.55 years and modified duration = 1.95 years.

Other things being equal, which of the following has the longest duration?

A)a 15 year bond with a 10% coupon

B)a 20 year bond with a 9% coupon

C)a 20 year bond with a 7% coupon

D)a 10 year zero coupon bond