
What does Macaulay duration of a bond measure?
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Get StartedWhat does Macaulay duration of a bond measure?
Options:
- The weighted-average time (in years) until the bond's cash flows are received
- The bond's coupon rate expressed as a percentage
- The bond's contractual maturity date in years
- The credit rating of the bond issuer
Correct answer: The weighted-average time (in years) until the bond's cash flows are received
Explanation: Macaulay duration is the weighted-average time (in years) until a bond's cash flows are received; it is used as a mechanism to approximate price sensitivity to yield changes via modified duration.
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