The Macaulay's duration of a 10-year, 10% bond with a face value of $1,000 and a market rate of 8%, compounded annually is:
A) 10 years
B) 11 years
C) 12 years
D) 13 years
E) None of the above

Question

Quizplus · Accepted Answer

Macaulay's duration is a weighted average time until a bond's cash flows are received, and it is calculated using the present value of each cash flow, including both the interest payments and the principal repayment, discounted at the market rate of interest. The given options do not match the calculation for a 10-year, 10% coupon bond with an 8% market rate, which requires a specific formula involving the present value of cash flows. The correct duration would need to be calculated and is not provided in the options.

The Macaulay's Duration of a 10-Year, 10% Bond with a Face