Show that the macaulay duration one period from now

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Reference no: EM132770143

Cash ?ow 1 consists of three payments: A is 5 periods, B in 10 periods and C in 15 periods. Cash ?ow 2 consists of 2 payments: X in 6 periods and Y in 12 periods. As of now, at yield j per period for all maturities, the two sets of cash?ows have the same present value and the same Macaulay duration. Suppose that one period from now the yield is still j for all maturities

Problem 1: Show that

(a) the two sets of cash ?ows will have the same present value at t=1

(b) the two sets of cash ?ows have the same Macaulay duration at that time

Reference no: EM132770143

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