Which the following bonds price would be more sensitive to an unexpected change in the interest rate?
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Question:
Which the following bonds price would be more sensitive to an unexpected change in the interest rate? (The market interest rate is 4% (EAR) for all the bonds below.)
A) a discount ( or zero coupon) bond with 5 years of maturity
B) a discount ( or zero coupon) bond with 7 years of maturity
C) a bond with annual coupons , a 3% coupon rate and 5 years to maturity
D) a bond with semi-annual coupons , a 5% coupon rate and 5 years to maturity
E) a bond with annual coupons , a 5% coupon rate and 5 years to maturity
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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