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I do not get why the effective duration of a floating-rate bond s close to the time to next reset!
If a floating-rate bond’s coupon is the reference rate on the reset date, then its price will reset to par. Therefore, its price doesn’t change much between coupon dates, so its effective duration is very short: approximately the time to the next reset.
Your information says that the rate is set in arrears. That’s quite unusual. Most floating-rate bonds’ coupon rates are set in advance, and paid in arrears.
This is based on the CFAI EOC questions. Specifically, Valuation and Analysis of Bonds with Embedded Options, Learning Module 3 (Page 526). Bond #6 states that it has a One-Year reference rate annually, set in arrears. Its effective duration is close to 1.
Understand that floating-rate bonds typically have less price change than fixed-rate bonds, and their effective durations are shorter, but I guess this doesn’t apply to above questions since it is “set in arrears”…