A portfolio consists of the following two bonds:$10,000 market value Bond A with duration of 4; $30,000 market value Bond B with duration of 6; Both bonds yield at 10% and make an annual couple payment. What is this bond portfolio's Macaulay duration?

The bond portfolio's Macaulay duration is 5.50

Explanation:

According to the following formula

Portfolio duration = weighted duration = (weight of Bond A*Duration of A) + (weight of Bond B*Duration of B)

= ((10,000/40,000) * 5) + ((30,000/40,000) * 6) = 5.50