A Corporate Bond Returns 12 Percent of Its Cost (In

Multiple Choice

A corporate bond returns 12 percent of its cost (in PV terms) in the first year,11 percent in the second year,10 percent in the third year and the remainder in the fourth year. What is the bond's duration in years?

A) 3.68 years
B) 2.50 years
C) 4.00 years
D) 3.75 years
E) 3.32 years