Of the following, the bond with the lowest Macaulay duration is the: A. 10%, 10-year Treasury. B. 8.5%, 10-year Treasury. C. 10-year, zero-coupon corporate. D. 10%, perpetual pay (consol) bond.
Both the consol and the corporate have a 10-year duration. The 10% coupon Treasury has a shorter duration than the 8.5% Treasury because coupon and duration are inversely related, all else equal.
