Macaulay duration and modified duration, Financial Management

Assignment Help:

We can also express Modified duration as follows:

          537_modified duration.png                                                                                    ...Eq. (3)

The expression in the brackets of the modified duration formula is given by equation (3) and is a measure created by Frederick Macaulay in 1938. This measure is known as Macaulay duration. Actually Macaulay duration is nothing but the weighted-average term to maturity of the cash flows from a bond. The weight of each cash flow is determined by dividing the present value of the cash flow by the price. Rewriting the formula of modified duration, we get:

         1438_modified duration1.png


Related Discussions:- Macaulay duration and modified duration

Show social and regulatory factors, Q. Show Social and Regulatory Factors? ...

Q. Show Social and Regulatory Factors? Regulatory climate and legislation against the environmental degradation may impair the profitability of the industry. Price control, vol

State about the financing mbo, State about the Financing MBO There are ...

State about the Financing MBO There are many sources of finances available for an MBO Venture capitalists Merchant banks Institutional investors such as pension funds

Australian securities and investment commission, Australian Securities and ...

Australian Securities and Investment Commission: The Australian Securities and Investment Commission (ASIC) is an independent government body established by the ASIC Act 1989.

Letter of credit (loc), Letter of Credit (LOC) A popular bank instrumen...

Letter of Credit (LOC) A popular bank instrument begins that a bank has granted the holder an amount of credit equal to the face amount of the L/C. A bank guarantees payment of

Syntax of accounting procedure, Syntax of Accounting Procedure The gen...

Syntax of Accounting Procedure The general accounting practices are: (a)  Do not consider any income or gain till the similar is realised in cash; (b)  Create or make pr

Analysis of collaterals, If normal operating revenues are inadequate ...

If normal operating revenues are inadequate to repay the debt, liquidation of collateral may be necessary. Corporate bonds can be either secured or unsecured by c

Importance of inventory management, Q. Importance of Inventory Management ...

Q. Importance of Inventory Management 1) Inventory helps in smooth and efficient running of business. 2) Inventory provide service to the customers immediately or at a short

Dividends paper, one page paper reviewing "the Morgan Stanley Oil and Gas R...

one page paper reviewing "the Morgan Stanley Oil and Gas Report"

Terms of maturity date very short term, 1. (a) A barbell is a approach of...

1. (a) A barbell is a approach of maintaining a portfolio of securities concentrated at two extremes in terms of maturity date very short term and very long term. A positive

Finance manangement, What is the maximum price that you would be willing to...

What is the maximum price that you would be willing to pay for a constant growth stock that has the following characteristics: (a) Dividend (Has Paid): $3.25, (b) Growth: 7%, and (

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd