Macaulay Duration

The Macaulay duration measure is _most accurately_ described as the:

Incorrect. This is a description of a bond's current yield.

Incorrect. The Macaulay duration measure accounts for principal repayment as well as coupon payments.

That's right! The first step in calculating a bond's Macaulay duration is to determine the present value of each of a bond's cash flows. The discounted value for each period is then multiplied by the weight of its associated cash flow (as a percentage of the bond's market price). The Macaulay duration is the sum of these weighted values.

present value-weighted timing of expected cash flows.

present value-weighted timing of expected coupon payments.

value of a bond's annual coupon payments divided by its market price.