A portfolio consists of the following two investments: a bond with face value of...
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Finance
A portfolio consists of the following two investments:
- a bond with face value of $100.00 paying annual coupons of 11% maturing in 5 years
- an annuity with payments of $50.00 at the end of each year for 5 years
The portfolio is comprised of 48% bonds and 52% annuities.
The term structure is flat and the current yield is 12% pa effective.
Calculate the duration (D) of the portfolio. Give your answer to 2 decimal places.
D = ____ years
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