Question: When comparing the interest rate sensitivity ( i . e . , the effect of a change in interest rates on the price of the
When comparing the interest rate sensitivity ie the effect of a change in interest rates on the price of the bond of two bonds: Bond A is a year bond with a coupon and bond B is a year bond with an coupon we expect that:
The interest rate sensitivity is greater for the Bond A
The interest rate sensitivity is greater for Bond B
Neither bond will be sensitive to interest rates because the coupon rate is fixed.
The interest rate sensitivity is the same for both bonds given they have the same maturity.
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