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31 January, 19:12

Which would have a longer duration: (a) a five-year fully amortized installment loan with semiannual payments or (b) a five-year semiannual payment bond, ceteris paribus. Why

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  1. 31 January, 22:51
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    Answer: (B) a five-year semiannual payment bond

    Explanation: The bond will have a longer duration because it is an investment that the investor receives interest payments until its maturity.

    The amortizing loan is a loan whereby the borrower pays principle and interest throughout the period of the loan.
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