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A Ford Motor Co. coupon bond has a coupon rate of 5.7%, a face value of $1,000, and pays annual coupons. The bond will mature
A Ford Motor Co. coupon bond has a coupon rate of 5.7%, a face value of $1,000, and pays annual coupons. The bond will mature in 4 years. The bond's yield-to- maturity is 5.2%. What is this bond's Macaulay Duration (MacD)? (Hint: Not covered in the eText. Check out your class notes and the TopHat note titled "Bond risk and duration". Step 1: Find the coupon amounts and draw the cashflow timeline Step 2: Compute the bond's price discounting each cashflow one by one from Step 1 at the bond's yield-to-maturity. of 2. Step 4: Add up the terms from Step 3 and divide the sum by the bond's price from Step2. This is the bond's MacD)
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