1. What is the Macaulay duration of a bond that has a par value of $1,000, a coupon rate of 7.83 percent (paid annually), and that matures in 12 years? Assume a required rate of return on this bond is 11.45 percent. You should use Excel calculator.
2. You recently bought a default free bond that makes exactly three payments over the next three years. The current market value of the bond is $3,258.27 and the security pays $700 in ine year, $1,100 in two years. The security has a yield to maturity of 8% what is the amount of the payment that you are supposed to receive at the end of three years?