Which of the bonds AD is most sensitive to a 1% drop in interest rates from 6%

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Which of the bonds A–D is most sensitive to a 1% drop in interest rates from 6% to 5% and why? Which bond is least sensitive? Provide an intuition explanation for your answer.

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Fundamentals of Corporate Finance

ISBN: 978-0132148238

2nd edition

Authors: Berk, DeMarzo, Harford

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Question Posted: Jan 14, 2012 02:24 AM

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Which of the bonds AD is most sensitive to a 1% drop in interest rates from 6%

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Bond A is most sensitive because it has th...View the full answer

Fundamentals of Corporate Finance

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