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| rev | Admin | (Created page with "'''Solution: B''' Duration equals <math display = "block"> \frac{\sum_{t=1}^{\infty}tv^tR_t}{\sum_{t=1}^{\infty}v^tR_t} = \frac{\sum_{t=1}^{\infty}tv^t1.02^t}{\sum_{t=1}^{\infty}v^t 1.02^t} = \frac{(Ia)_{\overline{\infty}|j}}{a_{\overline{\infty}|j}} = \frac{\ddot a_{\overline{\infty}|j}/j}{1/j} = \frac{1}{d}. </math> The interest rate j is such that (1+j)<sup>-1</sup> = 1.02v =1.02 /1.05 => j = 0.03 /1.02. Then the duration is <math display = "block"> 1/\,d=(1+j)/\...") | Nov 20'23 at 11:42 | +557 |