Question: Can you explain clearly why the price decrease is higher for zero-coupon bonds? (a) Describe the relationship between an increase in interest rates, the price

Can you explain clearly why the price decrease is higher for

Can you explain clearly why the price decrease is higher for zero-coupon bonds?

(a) Describe the relationship between an increase in interest rates, the price of a bond and: i. the size of coupon payments (i.e. if interest rates increase, how will the price of a bond move if it has large coupons vs if it has small coupons) As interest rates nise, the price of loond decreases. For lower coupon bonds the price decrease will be larger than for higher coupon bonds

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