On January 1, 2014, Tong purchased a ten-year bond at par. The bond pays semiannual coupons. Because Tong is an actuary, he enjoys calculating duration as a hobby. Tong calculated the Macaulay duration of the bond as 6.806 years on January 1, 2016, after receiving the coupon on January 1, 2016.

Calculate the Macaulay duration (in years) of the bond on January 1, 2016, right before receiving the coupon.

The Macaulay duration of Tong's bond on January 1, 2016, right before receiving the coupon, would be 7.306 years, by adding half a year to the given post-coupon payment duration of 6.806 years.

The question involves the calculation of Macaulay duration for a bond right before a coupon is paid. The Macaulay duration measures the weighted average time before a bondholder receives the bond's cash flows. The given duration after the January 1, 2016 coupon payment is 6.806 years. To find the duration right before the payment, we would add half a year (since it's a semiannual coupon) to account for the coupon payment that is about to be received, because duration is effectively reset after a coupon payment. Therefore, the duration of the bond just before the January 1, 2016 coupon is 6.806 years + 0.5 years = 7.306 years.