SIE Exam Question 1020: Answer and Explanation

Question: 1020

Which of the following is correct regarding the relationship between a bond's coupon and its duration?

  • A. Higher coupon = Lower duration = Lower interest rate risk
  • B. Higher coupon = Higher duration = Higher interest rate risk
  • C. Higher coupon = Lower duration = Higher interest rate risk
  • D. Higher coupon = Higher duration = Lower interest rate risk

Correct Answer: A

Explanation:

Higher coupon = Lower duration = Lower interest rate risk

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