The duration of a 40-year,$1,000 bond at a market rate of 4 percent is _________ the duration of an identical bond at a market rate of 6 percent.

Question

Quizplus · Accepted Answer

The duration of a bond is inversely related to the yield; as the market rate decreases, the duration increases. Therefore, at a lower market rate of 4 percent, the bond's duration is greater than at a 6 percent market rate.

The Duration of a 40-Year,$1,000 Bond at a Market Rate