Duration of a Pure Discount Bond

question 26

Multiple Choice

Duration of a pure discount bond:

• A) is equal to its half-life.
• B) is less than a zero coupon bond.
• C) is equal to the liabilities hedged.
• D) equal to its maturity.

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Definitions:

Nominal Exchange Rate

The rate at which a person can trade the currency of one country for the currency of another.

Real Interest Rate

The inflation-adjusted interest rate, signifying the actual cost of borrowing and the genuine return for investors.

Net Capital Outflow

The net flow of funds used for investment in foreign countries minus the flow of funds from foreign investments into the domestic market.

Domestic Investment

Financial investments within a country's borders, including infrastructure, buildings, and machinery, contributing to national economic growth.