Which one of the following bonds would be likely to exhibit a greater degree of interest rate risk?
A) A zero-coupon bond with 20 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 have higher interest rate risk due to their longer duration, and a 30-year maturity increases this risk compared to a 20-year maturity.

Which One of the Following Bonds Would Be Likely to Exhibit