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</p> Signup and view all the answers

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