Suppose there are 3 possible investments: A 17-yr zero coupon bond. A 17-yr annuity that pays 7%

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Suppose there are 3 possible investments:

A 17-yr zero coupon bond.

A 17-yr annuity that pays 7% per year.

A perpetuity that pays 7% per year.

Each investment has a face value of $100 and a discount rate of 10%. Which investment has the longest modified duration? Explain.

Related Book For answer-question

Engineering Economy

ISBN: 978-0132554909

15th edition

Authors: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

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Posted Date: Oct 16, 2020 04:04 AM

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Suppose there are 3 possible investments: A 17-yr zero coupon bond. A 17-yr annuity that pays 7%

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Macaulay Duration of zero coupon bond is equal to maturity17 Macau... View the full answer

Engineering Economy

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