Which of the following bonds has the longest duration?
A)5-year coupon bond
B)5-year, zero-coupon bond
C)10-year coupon bond
D)10-year, zero-coupon bond

Question

Quizplus · Accepted Answer

Zero-coupon bonds have longer durations than coupon bonds of the same maturity because they do not pay any interest, thus their prices are more sensitive to changes in interest rates. Among the given options, the 10-year, zero-coupon bond has the longest duration.

Which of the Following Bonds Has the Longest Duration