Corporate Bond A, returns 5 percent of its cost in PV terms in each of the first five years and 75 percent of its value in the sixth year. Corporate Bond B returns 7 percent of its cost in PV terms in each of the first five years and 65 percent of its cost in the sixth year. If A and B have the same required return, what is the duration of Bond A and the duration of Bond B?

Answer rating: 100% (QA)

To calculate the duration of a bond we need to consider the cash flows and the present values of tho... View the full answer