Which of the following two bonds is more price sensitive to changes in interest rates
1) A par value bond, X, with a 5-year-to-maturity and a 10% coupon rate.
2) A zero-coupon bond, Y, with a 5-year-to-maturity and a 10% yield to maturity.
A) Bond X because of the higher yield to maturity.
B) Bond X because of the longer time to maturity.
C) Bond Y because of the longer duration.
D) Both have the same sensitivity because both have the same yield to maturity.
E) None of the options
Correct Answer:
Verified
Q5: The "modified duration" used by practitioners is
Q6: The "modified duration" used by practitioners is
Q7: The duration of a 5-year zero-coupon bond
Q8: The interest-rate risk of a bond is
A)the
Q10: Holding other factors constant, the interest-rate risk
Q11: Holding other factors constant, which one of
Q11: Holding other factors constant, the interest-rate risk
Q12: Ceteris paribus, the duration of a bond
Q13: Ceteris paribus, the duration of a bond
Q14: Holding other factors constant, the interest-rate risk
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