Macaulay duration of a coupon bond
A 2-year bond pays an annual coupon of $8 (at and ) plus $100 face at . Its yield is 8% per year, so it trades at par ($100). What is its Macaulay duration, in years? (to 2 decimals)
Show hints (2)+
- Discount each cash flow, then weight its time by PV share.
- Duration = (1·PV₁ + 2·PV₂) / price.
Answer
Reveal answer →Final answer
1.93 (± 0.01)
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