At a 4% yield, the duration of a perpetuity that pays $100 once a year forever is ________.

A) 3.85 years
B) 4 years
C) 26 years
D) 100 years

Duration

An indicator of how a bond or debt security's price is affected by interest rate fluctuations, usually stated in terms of years.

Yield

The income return on an investment, such as the interest or dividends received, expressed as a percentage of the investment's cost or current market value.

Perpetuity

An annuity that pays a constant stream of cash flows indefinitely.