Duration of a pure discount bond:
A)is equal to its half-life.
B)is less than a zero coupon bond.
C)is equal to the liabilities hedged.
D)equal to its maturity.
E)None of the above.

Question

Quizplus · Accepted Answer

The duration of a pure discount bond is equal to its maturity because there are no coupon payments to affect the timing or amount of cash flows. Therefore, the duration is simply the weighted average of the time to the return of principal, which is the maturity date.

Duration of a Pure Discount Bond