SOA Exam FM Sample Question 32
Study guide: Exam FM-2
A common stock pays dividends at the end of each year into perpetuity. Assume that the dividend increases by 2% each year.
Using an annual effective interest rate of 5%, calculate the Macaulay duration of the stock in years.
- A) 27
- B) 35
- C) 44
- D) 52
- E) 58
Answer this question and see the worked solution