Corporate Finance, Quiz 1

September 2024 term, 27 Oct 2024, Set QDB2

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Question 1

+4−0Single correctInstructions

Consider a bond which pays 500 units in 5 years and 1000 units in 10 years. What is the maturity and duration of the bond, respectively?

Select one option

• A.

  10 years, 10 years

• B.

  5 years, 5 years

• C.

  10 years, 8.33 years

• D.

  5 years, 8.33 years

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Consider a bond which pays 500 units in 5 years and 1000 units in 10 years. What is the maturity and duration of the bond, respectively? Figure from the original question paper Assume Shyam earns Rs. 10000 in period 1 and Rs 12000 in period 2. He spends his earnings on consumption in period 1 and period 2. The prices of consumption in period 1 and period 2 are the same (equal to 1). If prevailing interest rate is 10% then the slope of the intertemporal budget constraint is