Question
Corporate Bond A, returns 5 percent of its cost in PV terms in each of the first five years and 75 percent of its value
Corporate Bond A, returns 5 percent of its cost in PV terms in each of the first five years and 75 percent of its value in the sixth year. Corporate Bond B returns 7 percent of its cost in PV terms in each of the first five years and 65 percent of its cost in the sixth year. If A and B have the same required return, what is the duration of Bond A and the duration of Bond B?
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Authors: Gail Fayerman
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