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Does a zero-coupon bond have a higher Macaulay duration than a coupon bond?

A zero-coupon bond assumes the highest Macaulay duration compared with coupon bonds, assuming other features are the same. It is equal to the maturity for a zero-coupon bond and is less than the maturity for coupon bonds. Macaulay duration also demonstrates an inverse relationship with yield to maturity.

How long does a zero coupon bond last?

Long-term zero coupon maturity dates typically start at ten to fifteen years. The bonds can be held until maturity or sold on secondary bond markets. Short-term zero coupon bonds generally have maturities of less than one year and are called bills. The US Treasury bill market is the most active and liquid debt market in the world.

What is the difference between a zero-coupon and a regular bond?

Payment of interest, or coupons, is the key difference between a zero-coupon and a regular bond. Regular bonds, which are also called coupon bonds, pay interest over the life of the bond and then repay the principal at maturity.

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