prices of high-coupon bonds tend to be less sensitive to a given change in interest rates than low-coupon bonds, other things held constant.

Question

Quizplus · Accepted Answer

This is because high-coupon bonds generate higher cash flows, which provide a greater cushion against a decline in bond prices due to rising interest rates. Additionally, investors are willing to pay more for the higher cash flows and therefore the prices of these bonds are less affected by changes in interest rates compared to low-coupon bonds.

Prices of High-Coupon Bonds Tend to Be Less Sensitive to a Given