Assume that the Japanese government issues two non-callable fixed-coupon bonds on the same date with the same
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Assume that the Japanese government issues two non-callable fixed-coupon bonds on the same date with the same coupon rate. The bonds are identical except that one matures in 10 years and the other matures in 30 years. If the relevant market discount rates for both bonds rise by 65 bps, which of the following will be true?
A. | The 10-year bond and the 30-year bond will have equal percentage price changes. | |
B. | The 10-year bond will have a larger percentage price change than the 30-year bond. | |
C. | The 10-year bond will have a smaller percentage price change than the 30-year bond. |
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