56 A bond with a coupon rate of 10 percent sells at a yield to maturity of 12 percent. If the bondmatures in 12 years, what is the Macaulay duration of the bond? What is the modified duration?(Do not round intermediate calculations. Round your answers to 3 decimal places.)X Answer is complete but not entirely correct.DurationMacaulay6.420 X yearsModified7.180 X years

The Macaulay duration is the weighted average term to maturity of a bond's cash flows. Portfolio…

Answered: A bond with a coupon rate of 10 percent…

A bond with a coupon rate of 10 percent sells at a yield to maturity of 12 percent. If the bond matures in 12 years, what is the Macaulay duration of the bond? What is the modified duration?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter4: Bond Valuation

Section: Chapter Questions

Problem 17P: Bond Value as Maturity Approaches An investor has two bonds in his portfolio. Each bond matures in 4...

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Loanable Funds Theory

The loanable funds theory is a neoclassical theory that determines the interest rate where the demand for loanable investments and supply of loanable funds intersect. To determine the interest rate, this theory employs linear regression and a demand curve. At the equilibrium point, demand for borrowings and demand for the issuance of borrowing funds are inextricably linked. This point of equilibrium should equalize demand and the supply of money available for borrowing.

Question

A bond with a coupon rate of 10 percent sells at a yield to maturity of 12 percent. If the bond
matures in 12 years, what is the Macaulay duration of the bond? What is the modified duration?
(Do not round intermediate calculations. Round your answers to 3 decimal places.)
X Answer is complete but not entirely correct.
Duration
Macaulay
6.420 X years
Modified
7.180 X years

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