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

Indirect-cost pools, 1. Increasing the number of indirect-cost pools is gua...

1. Increasing the number of indirect-cost pools is guaranteed to sizably increase the accuracy of product or service costs.do you agree? Support your anser using examples 2. The

Net income, What remains of an organization revenue after all expenses and ...

What remains of an organization revenue after all expenses and taxes have been paid.

Shareholders'' wealth maximization, Shareholders' wealth maximization S...

Shareholders' wealth maximization Shareholders' wealth maximization refers to maximization of the net present value of every decision made in the firm. Total present value is e

Define policy formulation - accounts receivable management, Q. Define Polic...

Q. Define Policy formulation - accounts receivable management This is concerned with set up the framework within which management of accounts receivable in an individual compan

Explain about cash forecasting method, Q. Explain about Cash Forecasting Me...

Q. Explain about Cash Forecasting Method ? Under this method an approximate is made of cash receipts and payments for the next period. Estimated cash receipts are added to the

Show repayment of principal, Your company is preparing to borrow $1,750,000...

Your company is preparing to borrow $1,750,000 on a 3-year, 10%, annual payment, fully amortized term loan. What fraction of the payment made at the end of the second year will sho

Types of companies likely to have high operating leverage, Give two example...

Give two examples of types of companies likely to have high operating leverage.Find examples other than those cited in the chapter. Long distance electricity generating compani

What do you know about sinking funds, Q. What do you know about sinking fun...

Q. What do you know about sinking funds? sinking funds : quite often, one may be interested to accumulate a target amount over a given period inclusive of interest for the peri

Define benefits of paying late, What are the benefits of “paying late” (but...

What are the benefits of “paying late” (but not too late) and how do companies attempt to do this? Since money has time value, the later cash is paid, but not as well late, the b

Explain the concept of working capital, Q. Explain the concept of working c...

Q. Explain the concept of working capital. Distinguish between variable and permanent working capital. What is the significance of such distinction in financing working capital req

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