Lee Inc. has two outstanding bonds that was issued last year, Bond A and Bond B. Both bonds has the same yield-to-maturity (YTM) of 6%: Bond A is a 15-year, 25% coupon bond, and Bond B is a 5-year, 5% coupon bond. Calculate the duration measure for both bonds as of now. Which of them has a higher interest rate risk?

Answer rating: 100% (QA)

Duration is a measure of the sensitivity of the bond pric... View the full answer