Find the duration of a loan given the below information. A bank grants a loan to one
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Find the duration of a loan given the below information. A bank grants a loan to one of its customers for a term of 5 years. The customer promises the bank an annual interest payment of 15 percent (that is, $150 per year). The face (par) value of the loan is $1,000, which is also its current market value (price) because the loan’s current yield to maturity is 10 percent. What is this loan’s duration? Time 1 2 3 4 5 Cash Flow 150 150 150 150 150
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Statement showing computation of Duration of the loan by Product Method PV Factor 10 Discounted Cash ... View the full answer
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