Final answer:
The statement that a bond's yield-to-maturity is inversely related to its Macaulay duration is true.
Step-by-step explanation:
The statement that a bond's yield-to-maturity is inversely related to its Macaulay duration is True.
Yield-to-maturity is the total return anticipated by an investor if a bond is held until it matures, and it takes into account the bond's price, coupon payments, and time to maturity. Macaulay Duration, on the other hand, measures the weighted average time it takes for an investor to receive all the cash flows from the bond.
As the Macaulay duration increases, it indicates that the bond's cash flows are received further into the future. Since yield-to-maturity reflects the bond's overall return and considers the time value of money, a longer duration indicates a larger risk of changes in interest rates, resulting in a lower yield-to-maturity for the bond.