You own two bonds: A zero-coupon bond with a 3-year maturity and a 10% coupon rate. A

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You own two bonds:

A zero-coupon bond with a 3-year maturity and a 10% coupon rate.

A par-value bond with a 3-year maturity and 10% yield to maturity.

Required:

What of your two bonds is more sensitive to changes in interest rates?

Related Book For answer-question

Investments An Introduction

ISBN: 978-0324561388

9th Edition

Authors: Herbert B Mayo

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Posted Date: Jun 11, 2023 04:42 AM

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You own two bonds: A zero-coupon bond with a 3-year maturity and a 10% coupon rate. A

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Expert Answer:

The length of time that a bond has been in circulation is an indicator of how sensitive it is to shifts in the interest rate environment The term duration refers to the weighted average amount of time ... View the full answer

Investments An Introduction

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