easy · Certified Financial Planner Investment Planning
The Inoue family is comparing two different bonds for a liability matching strategy. They find that one is a zero-coupon bond.
What is true about the Macaulay Duration of this zero-coupon bond?
- Its duration is zero because it pays no interest.
- Its duration is always less than its time to maturity.
- Its duration is exactly equal to its time to maturity.
- Its duration fluctuates based on the current market interest rate.
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