Answer:
A 7.3
Explanation:
Macaulay Convexity = 64, as about a single cash flow
Since it is a single cash flows, convexity is square the Macaulay duration of the bond.
Convexity = √Macaulay duration.
So, Macaulay duration = Convexity^(1/2)
Macaulay duration = Convexity^(0.5)
Macaulay duration = 64^0.5
Macaulay duration = 8
So, the Macaulay duration = 8 years
Now, Modified duration = Macaulay duration/(1+yield)
Modified duration = 8/(1+0.1)
Modified duration = 8/1.1
Modified duration = 7.27273
Modified duration = 7.3 years
