A zero-coupon bond has 10-years to maturity and a YTM of 8%. If the YTM instantaneously increases to 9%, what happens to the bond's price and duration?
A) The price decreases and the duration increases.
B) The price increases and the duration decreases.
C) The price decreases and the duration decreases.
D) The price decreases and the duration stays the same.
Correct Answer:
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