Which of the following set of conditions will result in a bond with the greatest price volatility?

Question

Quizplus · Accepted Answer

Bonds with a low coupon and a long maturity have the greatest price volatility because they have the longest time until maturity and the lowest interest payments, making them more sensitive to changes in interest rates. A high coupon would provide more stable income and a short maturity would result in the bond paying back the principal sooner, reducing the impact of interest rate changes on the bond's price.

Which of the Following Set of Conditions Will Result in a Bond