A Bond Has a Macaulay Duration of 4

question 61

Multiple Choice

A bond has a Macaulay duration of 4.5,a yield to maturity of 5.1 percent,a coupon rate of 6.0 percent,and semiannual interest payments.What is the bond's modified duration?

• A) 6.11 years
• B) 6.39 years
• C) 6.92 years
• D) 7.06 years
• E) 7.26 years

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Definitions:

Perpetual Inventory

A system of accounting for inventory that records the sale or purchase of inventory immediately through computerized systems.

Periodic Inventory

An accounting method where inventory is physically counted at specific intervals to determine the cost of goods sold and ending inventory.

Transactions

The act of buying, selling, or exchanging goods, services, or financial assets in the business world.

Inventory

The total of all goods and materials held by a business for the purpose of resale, production, or use in operations.