Which of the following bonds has the shortest duration? a) A bond with 20-year maturity, 10% coupon rate b) A bond with 20-year maturity, 6% coupon rate c) A bond with 10-year maturity, 6% coupon rate d) A bond with 10-year maturity, 10% coupon rate

Which of the following bonds has the shortest duration?
a) A bond with 20-year maturity, 10% coupon rate
b) A bond with 20-year maturity, 6% coupon rate
c) A bond with 10-year maturity, 6% coupon rate
d) A bond with 10-year maturity, 10% coupon rate
by

2 Answers

Answer :

a) A bond with 20-year maturity, 10% coupon rate
by

Answer :

All else constant, a bond with a longer maturity will be more sensitive to changes in interest rates. All else constant, a bond with a lower coupon will have greater interest rate risk.

The correct answer was
D) 10-year maturity, 10 percent coupon rate.
by

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