The duration of a four-year maturity 10% coupon bond is less than four years.

Question

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This is because the duration of a bond is affected not only by its maturity but also by its coupon rate and current interest rates. If current interest rates are lower than the bond's coupon rate, the bond will sell at a premium and have a shorter effective duration. Therefore, a four-year maturity 10% coupon bond may have a duration of less than four years depending on market conditions.

The Duration of a Four-Year Maturity 10% Coupon Bond Is