The duration of zero-coupon bonds will be ____ the duration of coupon bonds with the same maturity.
A) lower than
B) higher than
C) the same as
D) A or B, depending on the size of the coupon payment

Question

Quizplus · Accepted Answer

Zero-coupon bonds have a duration equal to their maturity because they do not make any interim coupon payments. In contrast, coupon bonds have a duration that is less than their maturity due to the present value of the coupon payments received before maturity.

The Duration of Zero-Coupon Bonds Will Be ____ the Duration