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Which Bond Is More Sensitive to an Interest Rate Change

Question 39

Multiple Choice

Which bond is more sensitive to an interest rate change of 0.75%?
Bond A: YTM = 4.00%, Maturity = 8 years, Coupon = 6% or $60, Par Value = $1,000
Bond B: YTM = 3.50%, Maturity = 5 years, Coupon = 7% or $70, Par Value = $1,000


A) A
B) B
C) Both the same
D) Cannot be determined

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