1. Consider the following three bonds, all with identical par values, yields to maturity, and semi-annual coupons:

• Bond A: coupons = 5% pa, maturity = 4 years
• Bond B: coupons = 2% pa, maturity = 4 years
• Bond C: coupons = 2% pa, maturity = 5 years

Which of the following is definitely true?

a) Duration (A) > Duration (C)

b) More than one of the other options is definitely true

c) Duration (C) > Duration (A)

d) Duration (A) > Duration (B)

e) Duration (B) > Duration (C)

2. Bond duration generally increases with a decrease in:

I. term to maturity

II. yield to maturity

III. coupon rate

a) II only

b) II and III

c) I, II and III

d) I only

e) III only