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5. Consider a 3-year, 6% annual coupon rate bond trading at a YTM of 5%. a. What is the Macaulay duration of the bond?

5. Consider a 3-year, 6% annual coupon rate bond trading at a YTM of 5%. a. What is the Macaulay duration of the bond? b. How much would you stand to lose/gain if you held $500,000 worth of the bond and YTM rose to 6%? C. What is the new Macaulay duration of the bond after the yield change? d. Answer questions (a)-(c) again for three-year zero-coupon bonds trading at a YTM of 5%. Can you generalize as to the Macaulay duration of zero-coupon bonds?

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