Question

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

Answer

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