SOA Exam FM Sample Question 458
Study guide: Exam FM-2
Investment A provides cash flows of 1000, 3000, and X at the end of years two, three, and five, respectively.
Investment B provides cash flows of 1000, 3000, and X at the end of years three, four, and seven, respectively.
The modified durations of Investment A and Investment B are 4 years and Y years, respectively, each based on an annual effective interest rate of 10%.
Calculate Y.
- A) 5.48
- B) 5.52
- C) 5.56
- D) 5.58
- E) 5.60
Answer this question and see the worked solution