The bond with the longest duration is the 10-year, zero-coupon bond.

Here's why:

1. Duration is a measure of a bond's sensitivity to changes in interest rates. It takes into account both the time to maturity and the coupon payments that the bondholder will receive.

2. Zero-coupon bonds have a duration equal to their time to maturity because they do not make any coupon payments before maturity. Therefore, a 10-year zero-coupon bond has a duration of 10 years.

3. Coupon bonds have a duration that is less than their time to maturity because the bondholder receives some of the payments before the bond matures. Therefore, a 10-year coupon bond and a 5-year coupon bond both have durations that are less than their respective times to maturity.

4. Therefore, out of the options given, the 10-year zero-coupon bond has the longest duration.

Question

The bond with the longest duration is the 10-year, zero-coupon bond.

Here's why:

1. Duration is a measure of a bond's sensitivity to changes in interest rates. It takes into account both the time to maturity and the coupon payments that the bondholder will receive.

2. Zero-coupon bonds have a duration equal to their time to maturity because they do not make any coupon payments before maturity. Therefore, a 10-year zero-coupon bond has a duration of 10 years.

3. Coupon bonds have a duration that is less than their time to maturity because the bondholder receives some of the payments before the bond matures. Therefore, a 10-year coupon bond and a 5-year coupon bond both have durations that are less than their respective times to maturity.

4. Therefore, out of the options given, the 10-year zero-coupon bond has the longest duration.

Knowee AI · Accepted Answer

The bond with the longest duration is the 10-year, zero-coupon bond.

Here's why:

1. Duration is a measure of a bond's sensitivity to changes in interest rates. It takes into account both the time to maturity and the coupon payments that the bondholder will receive.

2. Zero-coupon bonds have a duration equal to their time to maturity because they do not make any coupon payments before maturity. Therefore, a 10-year zero-coupon bond has a duration of 10 years.

3. Coupon bonds have a duration that is less than their time to maturity because the bondholder receives some of the payments before the bond matures. Therefore, a 10-year coupon bond and a 5-year coupon bond both have durations that are less than their respective times to maturity.

4. Therefore, out of the options given, the 10-year zero-coupon bond has the longest duration.

Which of the following bonds has the longest duration?Group of answer choices10-year coupon bond5-year, zero-coupon bond5-year coupon bond10-year, zero-coupon bond

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