POW #6: Duration Exercise You are evaluating an investment in an annual bond with exactly four years to maturity. The bond’s coupon rate is 10% and the bonds current YTM is 13%. 1. Calculate the bond’s Macaulay duration and modified duration. 2. How would you explain the concept of duration to an inexperienced investor? What factors influence duration?
This is the end of the preview.
access the rest of the document.