Duration increases with the maturity of a fixed-income asset at a decreasing rate.

Name: Duration increases with the maturity of a fixed-income asset at a decreasing rate.
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Question

Quizplus · Accepted Answer

As the maturity of a fixed-income asset increases, its duration also increases, but at a decreasing rate. This is because the impact of each additional year on the asset's cash flows becomes smaller as time goes on. Therefore, the relationship between maturity and duration is not a linear one.

Duration Increases with the Maturity of a Fixed-Income Asset at a Decreasing