Question

You have an investment that in today's dollars returns 12% of your investment in year 1, 18% in year 2, 11% in year 3, and the remainder in year 4. Rounded to two places, what is the Duration of this investment

Answer 1

The duration of this investment will be 14,005‬ years

Step-by-step explanation:

Duration of investment= Sum of ( Percentage* TIme)

=( 1 x 12%) + (2 x 18%) + (3 x 11%) + (4 x 59%)

= 12+36+33+13,924‬

=14,005‬ years