Question: Which answer is correct? You have a bond with maturity of 1 year and another with maturity of 4 years. If the yield on both

Which answer is correct?

You have a bond with maturity of 1 year and another with maturity of 4 years. If the yield on both bonds

rises by one percentage point:

a) The 1-year bond rises in price by more than the 4-year bond.

b) The 1-year bond falls in price by more than the 4-year bond.

c) The 1-year bond rises in price by less than the 4-year bond.

d) The 1-year bond falls in price by less than the 4-year bond.

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