Which of the Following Statements Is (Are)correct Regarding Duration

question 63

Multiple Choice

Which of the following statements is (are) correct regarding duration?

• A)In comparing two bonds with the same yield to maturity and the same maturity,a bond with a higher coupon rate will have a longer duration.
• B)In comparing two loans with the same maturity and the same interest rate,a fully amortized loan will have a shorter duration than a loan with a balloon payment.
• C)The duration will always be shorter than the maturity for all debt instruments.
• D)All of the options are correct.
• E)B and C

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Definitions:

Repurchase Prices

The cost at which a company can buy back shares or securities from the market or shareholders.

Market Prices

The current the current price at which an asset or service can be bought or sold in a particular market.

Dividends

Money given by a business to its stock owners, which comes from the profits the company has made.

Dividend Payments

Payments made by a corporation to its shareholders, usually derived from the company's profits.