Multiple Choice
Two bonds are selling at par value and each has 17 years to maturity.The first bond has a coupon rate of 6% and the second bond has a coupon rate of 13%.Which of the following is most false about the durations of these bonds?
A) The duration of the higher-coupon bond will be higher.
B) The duration of the lower-coupon bond will be higher.
C) The duration of the higher-coupon bond will equal the duration of the lower-coupon bond.
D) There is no consistent statement that can be made about the durations of the bonds.
E) The duration of the higher-coupon bond will be higher and will equal the duration of the lower-coupon bond;and there is no consistent statement that can be made about the durations of the bonds
Correct Answer:
Verified
Correct Answer:
Verified
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