Question: Bond A and Bond B both have an yield - to - maturity of 5 % and a coupon rate of 4 % . Bond

Bond A and Bond B both have an yield-to-maturity of5% and a coupon rate of4%. Bond A has a maturity of 15 years, whereas Bond B has a maturity of 20 years. Which of these two bonds is exposed to greater interest rate risk?
Question content area bottom
Part 1
A.
Bond B
B.
Bond A
C.
Bonds don't have interest rate risk
D.
They are exposed to the same interest rate risk as they have the same yield-to-maturity and coupon rate

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!