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    Question

    For which type of bond, duration of a bond would be

    equal to its time to maturity
    A Zero-coupon bond Correct Answer Incorrect Answer
    B Premium bond Correct Answer Incorrect Answer
    C Bond with embedded options Correct Answer Incorrect Answer
    D All of the above Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    For a zero-coupon bond, the duration is equal to the time to maturity as there are no cash flows in between. Principal payment at face value or at a premium is made at maturity only.

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