A 10-year maturity coupon bond has a six-year duration. An equivalent 20-year bond with the same coupon has a duration

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Quizplus · Accepted Answer

The duration of a bond increases with its maturity, so the 20-year bond will have a higher duration than the 10-year bond. However, the 20-year bond has the same coupon as the 10-year bond, so it will have a lower duration than a 20-year bond with a higher coupon. Therefore, the duration of the 20-year bond must be less than 12 years.

A 10-Year Maturity Coupon Bond Has a Six-Year Duration