Duration decreases as cash inflows are received more frequently.

Question

Quizplus · Accepted Answer

Duration, a measure of the sensitivity of the price of a bond or other debt instrument to changes in interest rates, typically decreases as cash inflows (such as coupon payments) are received more frequently. This is because receiving payments more frequently reduces the average time until cash flows are received, thereby reducing the bond's sensitivity to interest rate changes.

Duration Decreases as Cash Inflows Are Received More Frequently