A portfolio consists of a common stock and an 10-year 100, Ask an Expert

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A portfolio consists of a common stock and an 10-year, $100 par-value bonds with K% annual coupons. The stock pays a constant dividend $18 at the end of each year forever. When the annual effective yields of the stock and the bond are both 7.5%, the Macaulay duration of the stock is twice that of the bond. Find the modified duration of the portfolio if both the stock and the bond have an annual effective yield of 9%.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92343975

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