Question

Bond T is a zero coupon bond and has 11 years until maturity. If the yield to maturity is 10%, the Macaulay duration of this bond is

Answer 1

Answer:

11 years

Explanation:

The Macauly duration of a bond is generally calculated for coupon bearing bonds sold either at par or at premium or discount values. When we are asked about the Macauly duration of a zero coupon bond, the answer is simply the time to maturity of the bond, or the bond duration. In this case, the time to maturity is 11 years which equals the Macauly duration.