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Define and Explain (30 points) 1. (10 points) The duration in a bonds that pays $1 in year 1 and $1000 in year two, will
Define and Explain (30 points) 1. (10 points) The duration in a bonds that pays $1 in year 1 and $1000 in year two, will be much higher than for a bond that pays $100 in year 1 and $1 in year 2. This is because in the first case, the duration will be very close to the maturity number (assume both bonds have the same discount). True or False and explains. 2. (10 points) In a real estate market where you have the average price of the houses, the average growth rates for the rents, and the average monthly rent charged by tenants, how can you estimate the average discount rate used in that market to determine houses' price? Explain
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