Q650
More coupon payment or promised interest payment
A.
higher its duration
B.
lower its duration
AnswerC.
zero duration
D.
One year duration
Answer: Option B
Solution
Answer: Option B
Solution:
More coupon payment or promised interest payment lower its duration. Duration is a measure of the sensitivity of the price of a bond or other debt instrument to a change in interest rates. A bond's duration is easily confused with its term or time to maturity because they are both measured in years.