Explore BrainMass

Explore BrainMass

    Macaulay Duration bond

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Compute based on the following, consider the following:

    1. Bond w/5 yr term to mature, 12% coupon (annual), market yield 10%.
    2. Bond w/4 yr term to mature, 12% coupon (annual), market yield 10%.
    3. Compare answers for 1 & 2, discuss implications of this for classical immunization.

    Show work.

    © BrainMass Inc. brainmass.com June 4, 2020, 1:11 am ad1c9bdddf
    https://brainmass.com/business/bond-valuation/macaulay-duration-bond-384552

    Solution Preview

    Assuming the Par Value of the bond is 1000
    1. 12/(1.1) + 12/(1.1^2) + 12/(1.1^3) + 12(1.1^4) + 1000/(1.1^5) ...

    Solution Summary

    This solution discusses a Macaulay duration bond.

    $2.19

    ADVERTISEMENT