Which of the Following Bonds Has the Longest Duration

question 49

Multiple Choice

Which of the following bonds has the longest duration?

• A) 8-year maturity; 6% coupon.
• B) 8-year maturity; 11% coupon.
• C) 15-year maturity; 6% coupon.
• D) 15-year maturity; 11% coupon.

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Definitions:

Dollar Worth

The value of a currency expressed in terms of the amount of goods or services that one unit of money can buy.

After-Tax Distribution

The process of allocating income or assets to various recipients after all applicable taxes have been deducted.

Before-Tax Distribution

The allocation of income or wealth in a society before the effects of taxes are taken into account.

Progressive Income Tax

A tax system in which the rate of taxation increases as the taxable amount or income increases, making it more proportionately burdensome for wealthier individuals.