Asked by
Lander Tabalno
on Oct 19, 2024
Verified
The duration of a bond normally increases with an increase in:
I. Term to maturity
II. Yield to maturity
III. Coupon rate
A) I only
B) I and II only
C) II and III only
D) I, II, and III
Term To Maturity
The length of time until the principal amount of a bond or other debt instrument is due to be repaid.
Yield To Maturity
The total expected return on a bond if held until its maturity date, expressed as an annual rate.
Coupon Rate
The annual interest rate paid by a bond relative to its face value, expressed as a percentage.
- Comprehend the computation and consequences of bond duration and modified duration.
- Examine how coupon rate, maturity, and yield to maturity influence the duration of bonds and price fluctuations.
Verified Answer
JS
Learning Objectives
- Comprehend the computation and consequences of bond duration and modified duration.
- Examine how coupon rate, maturity, and yield to maturity influence the duration of bonds and price fluctuations.