The duration of a five year maturity 10% coupon bond will be higher than the duration of a five year maturity zero coupon bond.

Question

Quizplus · Accepted Answer

The duration of a zero-coupon bond is equal to its time to maturity, which means a zero-coupon bond will always have a higher duration than a coupon bond of the same maturity, because coupon payments cause the bond's duration to be less than its maturity.

The Duration of a Five Year Maturity 10% Coupon Bond