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Compute what is the duration of the bond

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Reference no: EM132715908

Problem 1: An organization purchased a four-year $10,000 bond paying a 7% annual coupon and interest rates (for present value purposes are currently at 4%. This works out to a present value of the payment streams of $673.08 + $647.19 + $622.30 + $9,146.40 = $11,088.97, which is the market price of the bond. What is the duration of this bond?

a. 2.75 years
b. 3.65 years
c. 3.75 years
d. 4.0 years

 

Reference no: EM132715908

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