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NEW QUESTION: 1
A. Option A
B. Option D
C. Option B
D. Option C
Answer: A
Explanation:
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NEW QUESTION: 2
A zero coupon bond matures in 5 years and is yielding 5%. What is its modified duration?
A. 5.25
B. 0
C. 4.76
D. 1
Answer: C
Explanation:
Explanation
A zero coupon bond has a Macaulay duration equal to its maturity, ie in this case 5 years. We can calculate modified duration from Macaulay duration by using the following relationship:
Modified duration = Macaulay duration/(1 + y) where y is the yield.
Therefore the correct answer is 5 / (1.05) = 4.76.
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Explanation:
Explanation
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