Question

The Arnold National Bank has a bond portfolio that consists of bonds with 5 years to maturity and a 9 percent coupon rate having a face value of $1,000. These bonds are selling in the market for $1,126. Coupon payments are made annually on this bond.
What is duration of these bonds?

A. 3.77 years

B. 4.23 years

C. 5 years

D. 9 years

E. None of the options is correct.

Answer

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