A Zero-Coupon Bond Has 10-Years to Maturity and a YTM

question 30

Multiple Choice

A zero-coupon bond has 10-years to maturity and a YTM of 8%. If the YTM instantaneously increases to 9%, what happens to the bond's price and duration?

• A) The price decreases and the duration increases.
• B) The price increases and the duration decreases.
• C) The price decreases and the duration decreases.
• D) The price decreases and the duration stays the same.

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