Calculate the duration of a bond using the cash flow approach shown in the spreadsheet below. This bond has a current price of $974.47, a coupon of 5.5 percent, and a maturity of 5 years. The YTM on this bond is 6.10 percent.
Use three decimal places for the last two rows of the spreadsheet. Refer to the example for calculating duration in Chapter 18. Note that the duration of this bond is the sum of the values found on the last row of the spreadsheet.

Transcribed Image Text:

Annual Coupon YTM Current nce Maturity Value Period Time in Years Cash Flows PV of Cash Flows Weighted PV of Cash Flows Wgtd. Av of Time Periods 6.10% 974.47 1000 7 8 9 10 0.5 1.5 2 2.5 3 3.5 4.5 5 Duration Sum of Row 13