An annual coupon bond has a coupon rate of 8%, face value of $100, and 3 years to maturity. If its yield to maturity is 3.2%, what is its Macaulay Duration? Answer in years, rounded to three decimal places. Type your numeric answer and submit
An annual coupon bond has a coupon rate of 8%, face value of $100, and 3 years to maturity. If its yield to maturity is 3.2%, what is its Macaulay Duration? Answer in years, rounded to three decimal places. Type your numeric answer and submit
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Homework • Unanswered
An annual coupon bond has a coupon rate of 8%, face value of $100, and 3 years to maturity. If its yield to maturity is 3.2%, what is
its Macaulay Duration? Answer in years, rounded to three decimal places.
Type your numeric answer and submit
Expert Solution
Step 1 Calculation of Macaulay Duration-
| Period | Cash Flow ($) | PVF @3.2% | PV of cash flow ($) | PV of time weighted cash flow ($) |
| 1 | 8 | 0.9690 | 7.752 | 7.752 |
| 2 | 8 | 0.9389 | 7.5112 | 15.0224 |
| 3 | 108 | 0.9098 | 98.2584 | 294.7752 |
| 113.5216 | 317.5496 |
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