Given the Time to Maturity, the Duration of a Zero-Coupon

question 11

Multiple Choice

Given the time to maturity, the duration of a zero-coupon bond is higher when the discount rate is

• A) higher.
• B) lower.
• C) equal to the risk-free rate.
• D) The bond's duration is independent of the discount rate.
• E) None of the options are correct.

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Definitions:

Price-Taker Markets

Markets in which individual buyers and sellers have no control over the prices at which they buy or sell goods, typically because the market is highly competitive and goods are standardized.

Dynamic Process

A system or sequence of actions characterized by continuous change, activity, or progress over time.

Decision Making

The process of making choices by identifying a decision, gathering information, and assessing alternative resolutions.

Barriers To Entry

Obstacles that make it difficult for new competitors to enter a market, including high start-up costs, regulatory requirements, and established brand loyalty.