The value of a 15-year bond will change for a given change in the required rate of return than the value of a 5 year bond.
A)more
B)less
C)the same percentage
D)exactly the same

Question

Quizplus · Accepted Answer

The value of a bond is inversely related to the required rate of return. Thus, a given change in the required rate of return will have a greater effect on the value of a 15-year bond than on the value of a 5-year bond. This is because the longer maturity of the 15-year bond exposes it to greater interest rate risk.

The Value of a 15-Year Bond Will Change for a Given