The Duration of a 15-Year Zero-Coupon Bond Is

question 18

Multiple Choice

The duration of a 15-year zero-coupon bond is

• A) smaller than 15.
• B) larger than 15.
• C) equal to 15.
• D) equal to that of a 15-year 10% coupon bond.
• E) None of the options are correct.

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Definitions:

Expected Return

The forecasted profit or loss from an investment, considering all possible outcomes and their probabilities.

Financial Rewards

Monetary benefits provided to employees or executives, often as a form of incentive or compensation.

High Risk

Refers to investments or financial decisions that carry a high potential for loss in conjunction with the possibility of generating significant returns.

Standard Deviation

A statistical measurement that quantifies the variation or dispersion of a set of data points from its mean, commonly used to gauge volatility in finance.