Which of the following statements is true regarding duration?
A)increases with the maturity of a fixed-income security but at a decreasing rate.
B)decreases as the yield on a security increases.
C)decreases as the coupon or interest payment increases.
D)is equal to the maturity of an immunized security.
E)all of the above are true.

Question

Quizplus · Accepted Answer

All the statements provided are true regarding duration. Duration measures the sensitivity of a bond's price to changes in interest rates, and it indeed increases with the maturity of a bond but at a decreasing rate, decreases as the yield or interest rates increase, decreases as the coupon rate increases, and for an immunized portfolio, the duration is set to match the target date to protect against interest rate changes.

Which of the Following Statements Is True Regarding Duration