The duration of a coupon bond increases at a diminishing rate as its term increases, so that the gap between the duration and term of the bond also widens as the term increases.

Question

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The duration of a coupon bond is the weighted average of the times until each of its cash flows is received. As the term of the bond increases, the duration also increases, but at a diminishing rate. This is because the present value of the cash flows received later in the bond's life is less than the present value of the cash flows received earlier in the bond's life. As a result, the gap between the duration and term of the bond also widens as the term increases.

The Duration of a Coupon Bond Increases at a Diminishing