Consider a perpetuity with a coupon rate of 5% pa. Coupons are paid annually. It is...
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Consider a perpetuity with a coupon rate of 5% pa. Coupons are paid annually. It is currently priced to yield 8% pa. Today is exactly nine months (three-quarters of a year) before the next coupon payment date. The current duration of this perpetuity is: (A) 12.75 years (B) 13.125 years 13.25 years 13.5 years (C) (D) Consider a perpetuity with a coupon rate of 5% pa. Coupons are paid annually. It is currently priced to yield 8% pa. Today is exactly nine months (three-quarters of a year) before the next coupon payment date. The current duration of this perpetuity is: (A) 12.75 years (B) 13.125 years 13.25 years 13.5 years (C) (D)
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To determine the duration of the perpetuity we need to calculate the Macaulay duration which is a we... View the full answer
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