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      Question

      The duration of a 5-year zero-coupon bond

      is
      A Less than 5 Correct Answer Incorrect Answer
      B More than 5 Correct Answer Incorrect Answer
      C Equal to 5 Correct Answer Incorrect Answer
      D Equal to that of a 5-year 10% coupon bond Correct Answer Incorrect Answer
      E Cannot be determined with given information Correct Answer Incorrect Answer

      Solution

      Duration of a zero-coupon bond equals the bond's maturity. For all other coupon bearing bonds, the duration is always less than the maturity period.

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