The formula for the duration of a perpetual bond which makes an equal payment each year in
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The formula for the duration of a perpetual bond which makes an equal payment each year in perpetuity is (1 + yield)/yield. If bonds yield 5 percent, which has the longer duration—a perpetual bond or a 15-year zero-coupon bond? What if the yield is 10 percent?
PerpetuityPerpetuity refers to payments that are made without an end or maturity date. A perpetuity is classified as an annuity, which is something that earns a dividend or receives a payment at a regularly scheduled interval, generally yearly. So, how...
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The duration of a perpetual bond is 1 yieldyield The duration of a perpetual bond with a yiel...View the full answer
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Related Book For 
Principles of Corporate Finance
ISBN: 978-0072869460
7th edition
Authors: Richard A. Brealey, Stewart C. Myers
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