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| rev | Admin | (Created page with "'''Solution: B''' Since the bond has no coupons, the Macaulay duration is the same as the amount of time until maturity, namely 4 years. Thus, the effective annual yield rate, y, is <math display = "block"> \left(\frac{1200}{1000} \right)^{1/4} -1 = 0.046635. </math> The modified duration equals the Macaulay duration divided by (1 + y). Thus the modified duration is 4/1.046635 = 3.82177 years. {{soacopyright | 2023 }}") | Nov 20'23 at 14:51 | +428 |