The longer the maturity of the bond, the more significantly its price changes in response to a given change in interest rates.

Question

Quizplus · Accepted Answer

This is because longer-maturity bonds have a greater sensitivity to changes in interest rates, as they are exposed to interest rate risk for a longer period of time. As interest rates change, the yield of a bond changes, which affects its price. Therefore, a bond with a longer time until maturity will have a greater change in price in response to a given change in interest rates compared to a bond with a shorter time until maturity.

The Longer the Maturity of the Bond, the More Significantly