A 6%, 30-year corporate bond was recently being priced to a yield of 7%. The Macaulay duration for the bond is 9.4 years. Given this information, the bond's modified duration would be

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Quizplus · Accepted Answer

Modified duration is calculated using the formula: Modified Duration = Macaulay Duration / (1 + Yield/Number of Periods per Year). Here, the yield is 7% or 0.07, and assuming annual compounding, the modified duration = 9.4 / (1 + 0.07) = 8.79.

A 6%, 30-Year Corporate Bond Was Recently Being Priced to a Yield