Gordon bought a 10-year bond, with a 6% coupon paid semi-annually. He paid $1,078 for the bond. What is the effective duration assuming a 50-basis point change in interest rates?

a. 7.3427.

b. 7.5755.

c. 8.1669.

d. 8.2154.

When using a dividend discount model, the least likely included input variable is the:

a. Required return of the investor.

b. Growth rate in the return on equity.

c. Growth rate in dividends.

d. Expected dividend stream.