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Good evening Sir
in part (c) of this question, it tells us to compute the modified duration of a loan repayment, if the loan is repaid in 4 equal installments @2%.
my answers are correct … however
i did not compute the 4 year ANNUITY but instead divided the principal amount by 4, took the present values for each year then did the duration and then computed the modified duration..and my answerts are the same as in the answer.
in the answer he computes the annuity and then computes the duration and the modified duration.
in the marking scheme it gives 1 mark for computing the annuity.
will i get the 1 mark for gettng the naswer right?
what is the significance of calculating the annuity anyway when u can do it in the regular method as given in texts?thank u!
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