Consider a bond with a face value of $1,000, a coupon rate of 6%, a yield to maturity of
8%, and ten years to maturity. This bond's duration is:
A) 8.7 years
B) 7.6 years
C) 0.1 years
D) 6.5 years

Question

Quizplus · Accepted Answer

Duration is a measure of a bond's sensitivity to interest rate changes. For a bond with a coupon rate lower than its yield to maturity, the duration is typically less than the bond's maturity. Given the bond's characteristics, the duration is approximately 7.6 years.

Consider a Bond with a Face Value of $1,000, a Coupon