Asked by Geneiva Kaarto on May 12, 2024
Verified
At a 4% yield, the duration of a perpetuity that pays $100 once a year forever is ________.
A) 3.85 years
B) 4 years
C) 26 years
D) 100 years
Perpetuity
An annuity that pays a constant stream of cash flows indefinitely.
Duration
An indicator of how a bond or debt security's price is affected by interest rate fluctuations, usually stated in terms of years.
Yield
The income return on an investment, such as the interest or dividends received, expressed as a percentage of the investment's cost or current market value.
- Determine and explain the lifespan of various bonds and tactics in investment.
Verified Answer
MW
Learning Objectives
- Determine and explain the lifespan of various bonds and tactics in investment.