Which of the following bonds would be likely to exhibit a greater degree of interest-rate risk?
A)A coupon-paying bond with 5 years until maturity
B)A coupon-paying bond with 20 years until maturity
C)A floating-rate bond with 20 years until maturity
D)A zero-coupon bond with 30 years until maturity

Question

Quizplus · Accepted Answer

Zero-coupon bonds with longer maturities, like the 30-year bond, are more sensitive to interest rate changes because they do not pay periodic interest and have a longer duration.

Which of the Following Bonds Would Be Likely to Exhibit