The Macaulay's Duration of a 10-Year, 10% Bond with a Face

question 22

Multiple Choice

The Macaulay's duration of a 10-year, 10% bond with a face value of $1,000 and a market rate of 8%, compounded annually is:

• A) 10 years
• B) 11 years
• C) 12 years
• D) 13 years
• E) None of the above

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Definitions:

Liability

Financial obligations or debts that a company owes to outside parties, which must be settled over time through the transfer of economic benefits.

Balance Sheet

A financial statement that provides a snapshot of a company's financial position, listing assets, liabilities, and shareholders' equity at a specific point in time.

Current Assets

Resources anticipated to be turned into cash, sold, or used up within a year or during the business's usual operating period, if that period extends beyond a year.

Inventory

Goods and materials that a business holds for the purpose of resale or as part of its production process.