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Basic Question 0 of 24
Which of the following statements about the Macaulay duration of a zero-coupon bond is true? The Macaulay duration of a zero-coupon bond ______
B. is equal to the bond's maturity in years divided by its yield-to-maturity.
C. cannot be calculated because of the lack of coupons.
A. is equal to the bond's maturity in years.
B. is equal to the bond's maturity in years divided by its yield-to-maturity.
C. cannot be calculated because of the lack of coupons.
User Contributed Comments 6
| User | Comment |
|---|---|
| johntan1979 | To be more specific, it is actually Maturity x (1 + YTM/n) |
| Shaan23 | Now that question from the previous unit makes sense.... |
| janglejuic | to be perfectly clear, and to not create the confusion here I just really wanted to mention that this question and the answer A: is equal to the bond's maturity in years is absolutely correct. I just made you read this for no reason. |
| farhan92 | so Macaulay duration is average time to recover principal and coupon. We'd only recover it at maturity hence A is correct. |
| dbedford | If you go to investopedia and look up bond duration it has some good videos explaining this stuff |
| CFAJ | in b4 mark meldrum |
Thanks again for your wonderful site ... it definitely made the difference.
Craig Baugh
Learning Outcome Statements
explain why effective duration and effective convexity are the most appropriate measures of interest rate risk for bonds with embedded options
calculate the percentage price change of a bond for a specified change in benchmark yield, given the bond's effective duration and convexity
CFA® 2025 Level I Curriculum, Volume 4, Module 13.