Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:A common stock pays dividends at the end of each year into perpetuity. Dividends are assumed to increase by 3% each year and the
annual effective interest rate is 4%. The first dividend is to be paid in one year.
Calculate the modified duration.
A
B
с
100
105
110
D 115
E 120
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