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**Basic Question 1 of 18**

A bond with annual coupon payments has the following characteristics:

Yield to maturity: 10%

Macaulay duration: 9

B. 8.33

C. 9.78

Coupon rate: 8%

Yield to maturity: 10%

Macaulay duration: 9

The bond's modified duration is ______.

A. 8.18

B. 8.33

C. 9.78

###
**User Contributed Comments**
7

User |
Comment |
---|---|

haarlemmer |
annual coupon! |

tanyak |
ANNUAL STUPID COUPON! |

wink44 |
Thought we didn't need to memorize that equation for the test? |

anneki |
We can memorize one more equation. |

DonAnd |
my sentiments exactly wink44 but it is actually an easy formula. |

rvera |
I always think that we should assume a semi-annual coupon...but perhaps that is just me. |

johntan1979 |
Question stated "annual". It's a very easy formula, guys! I'm sure there's some space left in our coconuts after all those CFA curriculum and formulas :) |

Your review questions and global ranking system were so helpful.

#### Lina

**Learning Outcome Statements**

define, calculate, and interpret Macaulay, modified, and effective durations;

explain why effective duration is the most appropriate measure of interest rate risk for bonds with embedded options;

define key rate duration and describe the use of key rate durations in measuring the sensitivity of bonds to changes in the shape of the benchmark yield curve;

*CFA® 2024 Level I Curriculum, Volume 5, Module 46.*