Question

A Treasury bond that settles on October 18, 2016, matures on March 30, 2035. The coupon rate is 5.65 percent and the bond has a yield to maturity of 4.94 percent. What are the Macaulay duration and modified duration?

Answer 1

Step-by-step explanation:

The Macaulay duration is the subjective standard cash flows term to maturity from a bond. The weight of each and everyone one of the cash flow is calculated by dividing the current value of the cash flow by the price.

While Modified duration is a method or mathematical formula that illustrates the measurable change in the worth of a security in relation to a change in the rates of interest.

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