All else being equal, a bond with a higher coupon has a duration that is ________ than that of a bond with a lower coupon.
A) greater than.
B) less than.
C) equal to.
D) undetermined in relation to.

Question

Quizplus · Accepted Answer

A higher coupon means more cash flows in the early years of the bond's life. This makes the bond more sensitive to changes in interest rates, and therefore gives it a longer duration.

All Else Being Equal, a Bond with a Higher Coupon