Duration of a coupon paying bond is:
A) equal to its number of payments.
B) less than a zero coupon bond.
C) equal to the zero coupon bond.
D) equal to its maturity.
E) None of these.

Question

Quizplus · Accepted Answer

The duration of a coupon-paying bond is less than that of a zero-coupon bond with the same maturity because the coupon payments allow the bondholder to receive some of the cash flows earlier, reducing the bond's sensitivity to interest rate changes.

Duration of a Coupon Paying Bond Is