Which of the following bonds has the longest duration?
A) An 8-year maturity, 0% coupon bond
B) An 8-year maturity, 5% coupon bond
C) A 10-year maturity, 5% coupon bond
D) A 10-year maturity, 0% coupon bond
E) Cannot tell from the information given

Question

Quizplus · Accepted Answer

A bond's duration generally increases with its maturity and decreases as its coupon rate increases. Therefore, a 10-year maturity, 0% coupon bond (D) would have the longest duration among the options provided, as it has the longest maturity and the lowest coupon rate (zero).

Which of the Following Bonds Has the Longest Duration