Which of the following is likely to have the greatest price increase if interest rates decrease....

Question

Question

Which of the following is likely to have the greatest price increase if interest rates decrease. O A A 10-year zero coupon bo

business finance

Answer 1

Answer #1

Here,

A perpetuity with a yield of 8%

Perpetuity has highest duration, so it will have greatest price increase if interest rates decreases.

Answer 2

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