a What is the duration of a zerocoupon bond that has sixteen

a. What is the duration of a zero-coupon bond that has sixteen years to maturity? b. What is the duration if the maturity increases to 18 years? c. What is the duration if the maturity increases to 19 years?

Solution

a. What is the duration of a zero-coupon bond that has sixteen years to maturity?

Duration is 16 years, because for a zero-coupon bond, maturity and duration is same.

b. What is the duration if the maturity increases to 18 years?

Duration is 18 years, , because for a zero-coupon bond, maturity and duration is same.

c. What is the duration if the maturity increases to 19 years?

Duration is 19 years, because for a zero-coupon bond, maturity and duration is same.

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Maturity and duration is same because we dont have any cash flows during the life of the zero-coupon bond.