The prices of strip bonds tend to react violently to large swings in interest rates.

Name: The prices of strip bonds tend to react violently to large swings in interest rates.
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Question

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Strip bonds, which are zero-coupon bonds, are highly sensitive to changes in interest rates as they do not pay any interest until maturity. Therefore, a large swing in interest rates can have a significant impact on their prices, causing them to react violently.

The Prices of Strip Bonds Tend to React Violently to Large