Question
What is meant by the Macauley duration of a financial investment? The modified duration? The Macauley duration of a fixed rate bond with coupon payments
What is meant by the Macauley duration of a financial investment? The modified duration?
The Macauley duration of a fixed rate bond with coupon payments must be more or less than its term to maturity? Explain.
If a fixed rate bond has a shorter term to maturity (all else the same), its Macauley duration is higher or lower? Explain.
If a fixed rate bond has higher coupon payments (all else the same), its Macauley duration is higher or lower? Explain.
If a bond has no coupon payments and only returns the face value at maturity, its Macauley duration is greater than, equal to, or less than the term to maturity? Explain.
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