Calculate the Macaulay Duration of a $1,000, Level-Coupon, 8% Bond

question 23

Multiple Choice

Calculate the Macaulay duration of a $1,000, level-coupon, 8% bond that matures in three years . The bond makes annual interest payments and repays its principal at the end of the
Third year, and the yield curve is a flat 10%.

• A)2.81 years
• B)0.59 years
• C)2.78 years
• D)3.41 years

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Definitions:

Reinforcement

In behavioral psychology, a process that strengthens a behavior or increases the likelihood of its repetition through the application of a stimulus.

Fine-tune

Making small adjustments to something in order to achieve the best possible performance or outcome.

Conscientiousness

A characteristic embodying reliability, a well-organized nature, and a profound commitment to responsibilities.

Neuroticism

A personality trait characterized by sadness, moodiness, and emotional instability.