Consider the bonds below and determine relative duration. As there are three bonds, there are three pairs of bonds. For each comparison provide one sentence or one clause explaining why a bond has a higher duration than the other bond.

Consider the bonds below and determine relative duration. As there are three bonds, there are three pairs of bonds. For each comparison provide one sentence or one clause explaining why a bond has a higher duration than the other bond.

Financial Accounting

15th Edition

ISBN:9781337272124

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter14: Long-term Liabilities: Bonds And Notes

Section: Chapter Questions

Problem 6PEB

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Question

Consider the bonds below and determine relative duration. As there are three bonds,
there are three pairs of bonds. For each comparison provide one sentence or one
clause explaining why a bond has a higher duration than the other bond.
a)
b)
c)
Bond
A
B
с
Coupon rate
7%
3%
7%
Bond A and Bond B
Bond A and Bond C
Bond B and Bond C
Time to maturity
7 years
7 years
9 years

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