Consider two recent bond issues by Microsoft: both have face values of $1,000 and coupon rates of 10% but one bond (call it the short bond) has five years to maturity and the other,the long bond,has twenty years to maturity.Which bond do you expect to be more sensitive to a change in yields? That is,for a given change in yield which bond (the long or the short) will experience a greater change in price?
A) The long bond
B) They are equally sensitive.
C) The short bond
Correct Answer:
Verified
Q69: Assume that the Microsoft bonds have 5-years
Q70: Consider two recent bond issues by Microsoft:
Q71: Suppose that you are reviewing a price
Q72: A US Government bond has 15 years
Q73: Microsoft just issued a bond with annual
Q75: In general,if interest rates _,bond prices _.
A)
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents