Consider the following cash flows. All market interest rates are 12%. What is the duration of these cash flows?

Year	0	1	2	3	4
Cash flow		100	110	130	230

An investor buys a $10,000 par, 6.25 percent annual coupon (paid semiannually) TIPS security with five years to maturity. If inflation every six months over the investor's holding period is 3 percent, what is the final payment the TIPS investor will receive?

Answer rating: 100% (QA)

To calculate the duration of the cash flows we need to find the present valueweighted average of the ... View the full answer