The special feature of consol bonds is that:
A)their duration equals their maturity
B)their maturity is infinite, while their duration is finite
C)their maturity is finite, while their duration is infinite
D)both, their maturity and their duration, are infinite

Question

Quizplus · Accepted Answer

Consol bonds, also known as perpetuities, have an infinite maturity because they pay interest indefinitely without principal repayment. However, their duration, which measures the sensitivity of a bond's price to changes in interest rates, is finite because the present value of distant cash flows becomes negligible.

The Special Feature of Consol Bonds Is That