Common elements for each bond: Coupon: 7.5%, semi-annual coupon payments, YTM = 9% Bond A: Time to
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Common elements for each bond: Coupon: 7.5%, semi-annual coupon payments, YTM = 9%
Bond A: Time to maturity: 5 years
Bond B: Time to maturity: 15 years
Consider these two bonds. Compute the interest rate sensitivity of each bond. Which bond has the lower sensitivity to changes in interest rates? For which bond is the rate of change in duration nonlinear? Explain briefly.
Related Book For
Fundamentals of Corporate Finance
ISBN: 978-1260153590
12th edition
Authors: Stephen M. Ross, Randolph W Westerfield, Robert R. Dockson, Bradford D Jordan
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