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To the nearest one decimal, what is the duration of a 3-year bond with a 10%...

To the nearest one decimal, what is the duration of a 3-year bond with a 10% annual coupon, face value of $10,000 at a market interest rate of 9%?

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Answer #1
Year Cash Flow PV Factor PV Of Cash Flow Weight of cash flow Weight * Year
a b c=1/1.09^a d=b*c e=d/1026.24
1 $          1,000.00 0.91743 $                 917.43 0.0895 0.0895
2 $          1,000.00 0.84168 $                 841.68 0.0821 0.1642
3 $       11,000.00 0.77218 $             8,494.02 0.828 2.4853
Total $           10,253.13 1.00000 2.74
Macaulay Bond Duration =2.74 years
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