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| rev | Admin | (Created page with "'''Solution: B''' Let <math>i</math> represent the effective market annual yield rate and <math>v=\frac{1}{1+i}</math>. The Macaulay duration is 3.70 years, which is equal to the present-value-weighted times of the liabilities. Therefore, we have <math display="block"> \begin{aligned} & 3.70=\frac{20,000(0)+100,000 v^5(5)}{20,000+100,000 v^5}=\frac{25 v^5}{1+5 v^5} \\ & 3.70+18.5 v^5=25 v^5 \\ & 3.70=6.5 v^5 \\ & v=0.89342 \\ & 1+i=1.11929 \end{aligned} . </math> Mod...") | Nov 20'23 at 17:19 | +648 |