How do we get the 1-year and 10-year values from these numbers? Is it not possible to derive these numbers from the figures given and this is just an example to illustrate interest rate risk?
 

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What is interest rate (or price) risk? Does a 1- year or 10-year bond have more interest rate risk? if decrease of increase . dow toget?. Interest rate risk is the concern that rising ra will cause the value of a bond to fall. Change 4.8% - 4.4% Id- 5% 10% 15% 1-year $1,048 $1,000 956 10-year $1,386 $1,000 749 Change +38.6% -25.1% • The 10-year bond is more sensitive to interest rate changes, and hence has more interest rate risk. What is interest rate (or price) risk? Does a 1- year or 10-year bond have more interest rate risk? if decrease of increase . dow toget?. Interest rate risk is the concern that rising ra will cause the value of a bond to fall. Change 4.8% - 4.4% Id- 5% 10% 15% 1-year $1,048 $1,000 956 10-year $1,386 $1,000 749 Change +38.6% -25.1% • The 10-year bond is more sensitive to interest rate changes, and hence has more interest rate risk.

Answer rating: 100% (QA)

It is assumed that the Face value or par value of the bond 100... View the full answer