Duration
A) assesses the time element of bonds in terms of both coupon and term to maturity.
B) allows structuring a portfolio to avoid interest-rate risk.
C) is a direct comparison between bond issues with different levels of risk.
D) a and b.
E) a and c.

Question

Quizplus · Accepted Answer

Duration assesses the time element of bonds, taking into account both coupon and term to maturity, which helps in structuring a portfolio to avoid interest-rate risk. Therefore, option A and B are correct. However, it is not a direct comparison between bond issues with different levels of risk, which makes option C incorrect. Therefore, the best choice is D, which includes both correct options.