Which of the following Treasury securities is likely to show the longest duration? A A 10-year zero coupon bond B A 10-year 10% coupon bond C A Disney unsecured bond D A very long maturity treasury bill A lower coupon rate has what effect on the bond’s duration? A Duration is twice as long for each percent increase B Duration is lower C Duration stays the same D Duration is higher
Which of the following Treasury securities is likely to show the longest duration? A A 10-year zero coupon bond B A 10-year 10% coupon bond C A Disney unsecured bond D A very long maturity treasury bill A lower coupon rate has what effect on the bond’s duration? A Duration is twice as long for each percent increase B Duration is lower C Duration stays the same D Duration is higher
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Which of the following Treasury securities is likely to show the longest duration?
- A
A 10-year zero coupon bond
- B
A 10-year 10% coupon bond
- C
A Disney unsecured bond
D
A very long maturity treasury bill
A lower coupon rate has what effect on the bond’s duration?
- A
Duration is twice as long for each percent increase
- B
Duration is lower
- C
Duration stays the same
-
DDuration is higher
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Duration is a measure of interest rate risk of a bond.
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