Valuing Bonds with Present Value Formula

• The weighted average of the number of years until each cash flow is to be paid (correct)
• The present value of each cash flow as a percentage of the bond’s full value
• The average time it takes for the bond to reach its full value
• The sum of all cash flows until the bond's maturity

• Macaulay duration divided by one plus the bond’s yield to maturity (correct)
• Macaulay duration minus the bond’s yield to maturity
• Macaulay duration added to the bond’s yield to maturity
• Macaulay duration multiplied by the bond’s yield to maturity

• The present value of all future cash flows
• Interest rate risk or sensitivity of a bond’s full price to a change in its yield (correct)
• The total value of the bond's cash flows
• The annual interest payment on the bond

<p>When its coupon rate is higher than the yield to maturity (B)</p> Signup and view all the answers

<p>It decreases approximately by modified duration percentage (D)</p> Signup and view all the answers