Explore BrainMass

Perpetual Bond and Zero Coupon Bond

This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

The formula for the duration of a perpetual bond that makes an equal payment each year in perpetuity is (1+yield)/yield. If bonds yield 5%, which has the longer duration--a perpetual bond or a 15 year zero coupon bond? What if the yield is 10%.

© BrainMass Inc. brainmass.com March 21, 2019, 6:22 pm ad1c9bdddf

Solution Summary

This solution provides calculations for durations of perpetual bonds and zero coupon bonds.