Macaulay duration (MacDur)
I have a question about the weight calculation. For the weights I got
w1 = .0556
w2 = .0514
w3 = .8415
Am I wrong? If so, how do you get the weights from the answer key?
An investor buys a 6% annual payment bond with three years to maturity. The bond has a yield-to-maturity of 8% and is currently priced at 94.845806 per 100 of par. The bond’s Macaulay duration is closest to:
C is correct. The bond’s Macaulay duration is closest to 2.83. Macaulay duration (MacDur) is a weighted average of the times to the receipt of cash flow. The weights are the shares of the full price corresponding to each coupon and principal payment.
Period × Weight
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