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

question 16

Multiple Choice

Given its time to maturity, the duration of a zero-coupon bond is ________.

• A) higher when the discount rate is higher
• B) higher when the discount rate is lower
• C) lowest when the discount rate is equal to the risk-free rate
• D) the same regardless of the discount rate

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Definitions:

Comparative Advantage

The ability of an entity to produce a good or service at a lower opportunity cost than its competitors.

Fewer Resources

Fewer resources refer to having a limited quantity of inputs or materials available for production or consumption compared to what is needed or demanded.

Specialization In Production

The process by which businesses or economies focus on producing a limited range of goods or services to gain greater efficiency and productivity.

International Trade

The exchange of goods and services between countries, allowing for specialization, more efficient production, and access to a broader range of products.