Question: Consider a five year bond with a 10% coupon that is presently trading at a yield to maturity of 8%. If market rates do not

  1. Consider a five year bond with a 10% coupon that is presently trading at a yield to maturity of 8%. If market rates do not change, one year from now the price of this bond _____________.
    1. Will be higher
    2. Will be lower
    3. Will be the same
    4. Cannot be determined from the information given

  1. A bonds sensitivity to interest rate changes _____________ at a(n) _______________ rate as maturity lengthens.
    1. increases; decreasing
    2. decreases; decreasing
    3. increases, increasing
    4. decreases, decreasing

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