21. If a 3-year, semi-annual bond ($1,000 par value) has an annual coupon rate of 8...

21. If a 3-year, semi-annual bond ($1,000 par value) has an annual coupon rate of 8 percent, and an annual yield to maturity of 6 percent, then calculate Macaulay's duration of the bond using the table format demonstrated in the video (not the equation)

Expert Solution

Duration of the bond

Period	CF	PVF@3%	Disc CF	Weights	*Weights Period**
1	$ 40.00	0.9709	$ 38.83	0.0368	0.0368
2	$ 40.00	0.9426	$ 37.70	0.0358	0.0715
3	$ 40.00	0.9151	$ 36.61	0.0347	0.1042
4	$ 40.00	0.8885	$ 35.54	0.0337	0.1349
5	$ 40.00	0.8626	$ 34.50	0.0327	0.1637
6	$ 40.00	0.8375	$ 33.50	0.0318	0.1907
6	$1,000.00	0.8375	$ 837.48	0.7944	4.7667
Duration of the Bond	5.4684

Pls do rate, if the answer is correct and comment, if any further assistance is required.

jeff jeffy answered 2 years ago

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