Assuming the market discount rate is 4% annually:A six-year maturity zero coupon note with a face value
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Question:
Assuming the market discount rate is 4% annually:A six-year maturity zero coupon note with a face value of $1,000.A seven-year maturity note paying 11% annually.
Which note is riskier according to their duration?
Does this result surprise you? Give a common-sense explanation of this result.
Related Book For
Financial Accounting an introduction to concepts, methods and uses
ISBN: 978-0324789003
13th Edition
Authors: Clyde P. Stickney, Roman L. Weil, Katherine Schipper, Jennifer Francis
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