Because call and put options can reduce the life of a bond, their effective durations will be less than or greater than the ED of their straight bond counterparts:
- Effective duration (callable) ≤ effective duration (straight).
- Effective duration (putable) ≤ effective duration (straight).
- Effective duration (zero-coupon) ≈ maturity of the bond.
- Effective duration of fixed-rate coupon bond < maturity of the bond.
- Effective duration of floater ≈ time (in years) to next reset.