FREE Trial

What is the duration of a bond with four years to maturity and a coupon of 7.1

Question:

What is the duration of a bond with four years to maturity and a coupon of 7.1 percent paid annually if the bond sells at par?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Answer rating: 60% (5 reviews)

The duration of the bond is eight years The coupon on the bond is 71 percent so thats how much you w...View the full answer


answer-question-section
Answered By
tutor-profile-image
Brian Otieno
I'm Brian , an experienced professional freelancer with countless hours of success in freelancing many subjects in different disciplines. Specifically, I have handled many subjects and excelled in many disciplines. I have worked on many Computer Science projects and have been able to achieve a lot in that field. Additionally, I have handled other disciplines like History, Humanities, Social Sciences, Political science, Health care and life science, and Religion / Theology. My experience generally in these subjects has made me able to deliver high-quality projects in a very timely fashion. I am very reliable at my job and will get the work done in time, no matter what. In Addition, I have managed to ensure that the work meets my client's expectations and does not cause an error. I am a hard-working and diligent person who is highly responsible for everything I do. Generally, Freelancing has made me more accountable for doing my job. Additionally, I have had a passion for writing for the last seven years in this field.
0.00 0 Reviews 10+ Question Solved
Related Book For  book-img-for-question
Corporate Finance

Corporate Finance

ISBN: 9781260772388

13th Edition

Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe

See More Books
Question Posted:
See More Questions

Related Video

Bond valuation is the process of determining the worth of a bond. It is based on the present value of the bond\'s future cash flows, which include coupon payments and the return of the bond\'s face value (or \"principal\") at maturity. The discount rate used in the calculation is directly tied to prevailing interest rates, and a rise in interest rates will decrease the present value of the bond and thus lower its price. Conversely, a fall in interest rates will increase the present value of the bond and raise its price. Interest rates serve as a benchmark for determining the value of a bond, as they determine the discount rate used in the bond valuation calculation. The most commonly used measure of interest rates is the yield to maturity (YTM), which represents the internal rate of return of an investment in a bond if the investor holds the bond until maturity and receives all scheduled payments. Yield to maturity is a function of the coupon rate, the current market price of the bond, the face value of the bond, and the number of years remaining until maturity. By comparing the yield to maturity of a bond to prevailing market interest rates, an investor can assess the relative value of the bond.

Students also viewed these Business questions

Problem Solving In Organizations A Methodological Handbook For Business And Management Students 3rd Edition - ISBN: 1108402771 - Free Book