An investor holds two bonds, one with 5 years until maturity and the other with 20 years until maturity.Which of the following is more likely if interest rates suddenly increase by 2%?
A) the 5-year bond will decrease more in price.
B) the 20-year bond will decrease more in price.
C) both bonds will decrease in price similarly.
D) neither bond will decrease in price, but their yields will increase.
Correct Answer:
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