Use the following information to answer questions 17 - 27. A 2-year 10% annual coupon bond yields 5%. Compute the Macaulay duration of the bo the following table for $1000 face value. Year 1 2 Cash Flow #17 #21 Column Sum: PV of Cash Flow (6 decimals) # 18 #22 #25 Weight frac (5 decimals) #19 #23 1.0000 Weight x Year (4 decimals) #20 #24 #26
Use the following information to answer questions 17 - 27. A 2-year 10% annual coupon bond yields 5%. Compute the Macaulay duration of the bo the following table for $1000 face value. Year 1 2 Cash Flow #17 #21 Column Sum: PV of Cash Flow (6 decimals) # 18 #22 #25 Weight frac (5 decimals) #19 #23 1.0000 Weight x Year (4 decimals) #20 #24 #26
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
Problem 1PS
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![### Bond Duration Calculation Worksheet
**Instructions:** Use the following information to answer questions 17 - 27.
**Scenario:** A 2-year 10% annual coupon bond yields 5%. Compute the Macaulay duration of the bond. Fill in the following table for a $1000 face value.
| Year | Cash Flow | PV of Cash Flow (6 decimals) | Weight frac (5 decimals) | Weight x Year (4 decimals) |
|------|-----------|------------------------------|-------------------------|----------------------------|
| 1 | #17 | #18 | #19 | #20 |
| 2 | #21 | #22 | #23 | #24 |
| **Column Sum:** | | **#25** | **1.0000** | **#26** |
**Macaulay Duration Calculation:**
\[ \text{Macaulay Duration} = \frac{\sum (\text{Weight x Year})}{\text{Column Sum Weight frac}} = \underline{\phantom{\qquad}} \ (\text{4 decimals}) \]
**Note:** The blank spaces (e.g., #17, #18) indicate where you need to fill in your calculated values.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F647a6f54-b5ba-4631-94b7-ffd1df63771e%2F22fbc9b8-fe41-4fef-86c7-be9dd7e9963f%2Fthbf4y_processed.png&w=3840&q=75)
Transcribed Image Text:### Bond Duration Calculation Worksheet
**Instructions:** Use the following information to answer questions 17 - 27.
**Scenario:** A 2-year 10% annual coupon bond yields 5%. Compute the Macaulay duration of the bond. Fill in the following table for a $1000 face value.
| Year | Cash Flow | PV of Cash Flow (6 decimals) | Weight frac (5 decimals) | Weight x Year (4 decimals) |
|------|-----------|------------------------------|-------------------------|----------------------------|
| 1 | #17 | #18 | #19 | #20 |
| 2 | #21 | #22 | #23 | #24 |
| **Column Sum:** | | **#25** | **1.0000** | **#26** |
**Macaulay Duration Calculation:**
\[ \text{Macaulay Duration} = \frac{\sum (\text{Weight x Year})}{\text{Column Sum Weight frac}} = \underline{\phantom{\qquad}} \ (\text{4 decimals}) \]
**Note:** The blank spaces (e.g., #17, #18) indicate where you need to fill in your calculated values.
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