Cash can be thought of as an asset. What is the duration for cash?

a. -1

b. 0

c. 1

d. 2

Consider the following bonds:

Bond A: 1-year zero-coupon bond (face value = $100)

Bond B: 2-year zero-coupon bond (face value = $1,000)

Bond C: 2-year coupon bond paying a 10% annual coupon (face value = $1,000)

Then, Bonds A and B are combined to produce a fourth bond, D (whose cash flows are equal to those of A + those of B). Which of the following is true?

1. A has a higher duration than B

2. B has a lower duration than C

3. C has a higher duration than D

4. None of the above