The duration of a par-value bond with a coupon rate of 8% (paid annually) and a remaining time to maturity of 5 years is

A) 5 years.
B) 5.4 years.
C) 4.17 years.
D) 4.31 years.

Par-Value Bond

A bond that is issued and redeemed at its face value, which is the amount paid to the bondholder at maturity.

Coupon Rate

The annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity.

Duration

A measure of the sensitivity of the price of a bond or other debt instrument to changes in interest rates, usually expressed in years.