Question
Asked Nov 13, 2019
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What is the current price and Macaulay's duration of a $1,000, 8% coupon bond that pays interest semi-annually if the bond matures in ten years and has a yield-to-maturity of 9.65%?

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Expert Answer

Step 1

Calculation of current price and Macaulay’s duration:

The bond price is $895.64, and Macaulay’s duration is 6.88.

Note: The date of settlement and date of ma...

A
B
C
1 FV
($1,000)
2 Interest rate
0.08
3 Number of years
4 YTM
5 PMT
6 PV(bond price)
10
0.0965
(S80.00)
$895.64
7
8 Settlement date
9 maturity date
10 Macaulay duration
11/13/2009 (Assumed)
11/13/2019 (Assumed)
6.88
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A B C 1 FV ($1,000) 2 Interest rate 0.08 3 Number of years 4 YTM 5 PMT 6 PV(bond price) 10 0.0965 (S80.00) $895.64 7 8 Settlement date 9 maturity date 10 Macaulay duration 11/13/2009 (Assumed) 11/13/2019 (Assumed) 6.88

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