Chartered Financial Analyst Level 1
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An analyst evaluates three option-free bonds trading at a premium with the following characteristics:
- Bond 1: Coupon = 4%, Yield to Maturity = 4%, Time to Maturity = 10 years
- Bond 2: Coupon = 4%, Yield to Maturity = 5%, Time to Maturity = 11 years
- Bond 3: Coupon = 5%, Yield to Maturity = 5%, Time to Maturity = 9 years
All else being equal, which bond is most likely to have the lowest Macaulay duration?
An analyst evaluates three option-free bonds trading at a premium with the following characteristics:
- Bond 1: Coupon = 4%, Yield to Maturity = 4%, Time to Maturity = 10 years
- Bond 2: Coupon = 4%, Yield to Maturity = 5%, Time to Maturity = 11 years
- Bond 3: Coupon = 5%, Yield to Maturity = 5%, Time to Maturity = 9 years All else being equal, which bond is most likely to have the lowest Macaulay duration?
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