A bond with annual coupon payments has the following characteristics:
$\begin{array}{ccc}
\text { Coupon Rate } & \text { Yield-to-Maturity } & \text { Macaulay Duration } \
\hline 8 \% & 10 \% & 9
\end{array}$ The bond's modified duration (in years) is:

Question

A bond with annual coupon payments has the following characteristics:
 $\begin{array}{ccc}
\text { Coupon Rate } & \text { Yield-to-Maturity } & \text { Macaulay Duration } \
\hline 8 \% & 10 \% & 9
\end{array}$  The bond's modified duration (in years) is:

Quizplus · Accepted Answer

The modified duration is calculated using the formula: Modified Duration = Macaulay Duration / (1 + Yield-to-Maturity). Here, it is 9 / (1 + 0.10) = 8.18 years.