Multiple Choice
Which of the following two bonds is more price sensitive to changes in interest rates? 1) A par-value bond, D, with a 2 year to maturity and an 8% coupon rate.
2) A zero-coupon bond, E, with a 2 year to maturity and an 8% yield to maturity.
A) Bond D because of the higher yield to maturity
B) Bond E because of the longer duration
C) Bond D because of the longer time to maturity
D) Both have the same sensitivity because both have the same yield to maturity.
Correct Answer:
Verified
Correct Answer:
Verified
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