CFA Practice Question

There are 266 practice questions for this study session.

CFA Practice Question

A longer time-to-maturity might lead to a lower duration for a bond priced at a discount. This situation only occurs if ______

I. the coupon rate is low.
II. the coupon rate is high.
III. the time-to-maturity is long.
IV. the yield-to-maturity is low.
A. I and III
B. II and III
C. I and IV
Explanation: A long-term, low-coupon bond may have a lower duration than a shorter-term bond.

User Contributed Comments 2

User Comment
ecapocas Not making any sense to me....a lower coupon means more of the realizable NPV occurs at the end of the timeline(and thus a higher duration), and a longer term by definition means a longer duration.

So how on earth do these things result in a “lower duration”?
fatherlee I don’t get it
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