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:

Perpetual Inventory System

A method of accounting for inventory that records sales and purchases of inventory immediately through the use of computer systems.

Cost of Merchandise Sold

A reiteration focusing on the total expenses incurred by a company to sell its merchandise, including the cost of the goods themselves and any additional costs related to their sale.

Credit Card Sales

Transactions where customers use credit cards to pay for goods or services, resulting in receivables for the seller.

Periodically Recorded

Financial transactions or events that are recorded at regular intervals, such as monthly, quarterly, or annually.