Ceteris paribus,the duration of a bond is positively correlated with the bond's

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Quizplus · Accepted Answer

Ceteris paribus means all other factors are held constant, so the only variable that can affect the duration of a bond is its time to maturity, which measures how many years until the bond's principal is repaid to the investor. The longer the time to maturity, the greater the sensitivity of the bond's price to changes in interest rates, because more future cash flows are affected by those changes. Coupon rate (the interest rate paid on the bond) and yield to maturity (the total return anticipated if the bond is held until it matures) can affect the price of the bond, but they are not direct determinants of its duration.

Ceteris Paribus,the Duration of a Bond Is Positively Correlated with the Bond's