Exhibit 19.10
Use the Information Below for the Following Problem(S)
You are creating a portfolio that consists of the following two bonds. Bond A pays an annual 7% coupon, matures in two years, has a yield to maturity of 8%, and a face value of $1,000. Bond B pays an annual 8% coupon, matures in three years, has a yield to maturity of 9%, and a face value of $1,000.
-Refer to Exhibit 19.10.Calculate the Macaulay Duration for Bond A.

Question

Quizplus · Accepted Answer

$$\text { Macauley Duration } = \frac { \frac { ( 1 ) ( 70 ) } { ( 1.08 ) ^ { 1 } } + \frac { ( 2 ) ( 1070 ) } { ( 1.08 ) ^ { 2 } } } { 982.17 } = \frac { 64.81 + 1834.71 } { 982.17 } = 1.93$$

Exhibit 19.10 Use the Information Below for the Following Problem(S)