Which one of the following increases the sensitivity of the bond prices?

Question

Quizplus · Accepted Answer

The sensitivity of bond prices, also known as bond price volatility, increases with an increase in maturity. This is because longer-term bonds are more sensitive to changes in interest rates than shorter-term bonds. As interest rates change, the price of longer-term bonds will change more significantly than shorter-term bonds. Therefore, an increase in maturity leads to an increase in sensitivity of bond prices.

Which One of the Following Increases the Sensitivity of the Bond