An individual has a portfolio that consists of 1) a three year zero coupon bond with a maturity value of $5000 and a yield of 5% 2) a four year zero coupon bond with a maturity value of $5000 and a yield of 6% and 3) a perpetuity of dividends from a common stock, where the first dividend is $100 and is paid one year from now, and each dividend is 3% higher than the prior one. The yield is 6%. What is the duration of this portfolio

An individual has a portfolio that consists of 1) a three year zero coupon bond with a maturity value of $5000 and a yield of 5% 2) a four year zero coupon bond with a maturity value of $5000 and a yield of 6% and 3) a perpetuity of dividends from a common stock, where the first dividend is $100 and is paid one year from now, and each dividend is 3% higher than the prior one. The yield is 6%. What is the duration of this portfolio

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter6: Fixed-income Securities: Characteristics And Valuation

Section: Chapter Questions

Problem 8P

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