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Calculate the modified duration of this investment

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Question - Suppose that a three-year financial instrument is expected to make increasing payments to you at the end of each of the next three years. Specifically, the payments will be CF(t) = 1200t for t = 1, 2, and 3. Assume you purchase this financial instrument, at time t = 0, at a price which provides an annual effective yield of 8%. Calculate the modified duration of this investment.

Reference no: EM132951209

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