A 20-year original maturity bond with 1 year left to maturity has more interest rate price risk than a 10-year original maturity bond with 1 year left to maturity.(Assume that the bonds have equal default risk and equal coupon rates. )

Question

Quizplus · Accepted Answer

Both bonds have the same duration (time left to maturity) and therefore the same interest rate price risk, assuming all other factors like coupon rates and default risk are equal.

A 20-Year Original Maturity Bond with 1 Year Left to Maturity