What is the duration of a five-year zero-coupon bond?
A)2.5 Years
B)1 Year
C)5 Years
D)0 Years

Name: What is the duration of a five-year zero-coupon bond? A)2.5 Years B)1 Year C)5 Years D)0 Years
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Question

Quizplus · Accepted Answer

A zero-coupon bond does not pay any coupon or interest payments. Instead, it is sold at a discount to face value and the investor receives the full face value at maturity. As the name suggests, a five-year zero-coupon bond has a maturity of five years. Therefore, the correct answer is C) 5 Years.

What Is the Duration of a Five-Year Zero-Coupon Bond