Maximum Pension Fund is attempting to manage one of the bond portfolios under its management. The fund
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Question:
Maximum Pension Fund is attempting to manage one of the bond portfolios under its management. The fund has identified three bonds that have five-year maturities and trade at a yield to maturity of 9 percent. The bonds differ only in that the coupons are 7 percent, 9 percent. and 11 percent.
A. What is the duration for each bond?.
B. What is the relationship between duration and the amount of coupon interest that is paid? Plot the relationship.
Related Book For
Financial and Managerial Accounting
ISBN: 978-0132497978
3rd Edition
Authors: Horngren, Harrison, Oliver
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