All else equal, bond price volatility is greater for ________.
A) higher coupon rates
B) lower coupon rates
C) shorter maturity
D) lower default risk

Question

Quizplus · Accepted Answer

Lower coupon rates result in greater sensitivity of bond prices to changes in interest rates, leading to higher price volatility. Higher coupon rates make bonds less sensitive to interest rate changes, resulting in lower price volatility. Maturity and default risk also affect bond price volatility, but the question only asks for the best choice, which is option B.

All Else Equal, Bond Price Volatility Is Greater for ________