Which Bond Has the Longest Duration

question 61

Multiple Choice

Which bond has the longest duration?

• A) 30-year maturity; 6% coupon
• B) 30-year maturity, 8% coupon
• C) 25-year maturity, 11% coupon
• D) 25-year maturity, 3% coupon

---

Definitions:

Compounded Annually

The calculation of interest on both the initial principal and the accumulated interest from past periods once a year.

Time-value of Money

The concept that money available at the present time is worth more than the same amount in the future due to its earning capacity.

Month-end Payments

Payments that are due or processed at the end of each month.

Compounded Semi-annually

A method of calculating interest in which the interest is added to the principal sum twice a year.