You sold a security which requires you to pay $728.50 two years from now and $715.80 ten years from now. The yield to maturity is 5%. The Macaulay duration of your liability is ___.
A. 
4.8 

B. 
5.4 

C. 
5.2 

D. 
6.2 
Year  Cash Flow  PV Factor  PV Of Cash Flow  Weight of cash flow  Weight * Year 
a  b  c=1/1.05^a  d=b*c  e=d/1021.70  
2  $ 728.50  0.90703  $ 660.77  0.6006  1.2012 
10  $ 715.80  0.61391  $ 439.44  0.3994  3.9941 
Total  $ 1,100.21  1.00000  5.2  
Macaulay Bond Duration =5.2 years 
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