Duration is positively correlated with maturity, meaning as maturity increases, duration typically increases. However, it moves in the opposite direction of market interest rates and coupon rates, meaning as interest rates or coupon rates increase, duration decreases.

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Duration Is

Question 50

Multiple Choice

Duration is

A) Positively correlated with interest rates and coupon rates but moves in the opposite direction of maturity
B) Negatively correlated with maturity but moves in the same direction as market rates of interest and coupon rates
C) Positively correlated with maturity but moves in the opposite direction of market rates of interest and coupon rates
D) None of the above

Correct Answer: