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You are given the following information with respect to a callable bond: Time/ Exected cash flows at 7% Annual yield 1 /8.00 2/ 7.90 3

You are given the following information with respect to a callable bond:

Time/ Exected cash flows at 7% Annual yield

1 /8.00

2/ 7.90

3 /107.80

Annual Yield/ Bond Price

6% /104.33

7% /102.37

8%/ 99.76

The current yield is 7%

Calculate the ratio of the modified duration to the effective duration of this bond.

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