Which one of the following bonds is the most sensitive to changes in market interest rates?...
Which one of the following bonds is the most sensitive to changes in market interest rates?
a. 5-year, zero coupon
b. 5-year, 5 percent coupon
c. 5-year, 8 percent coupon
d. 10-year, zero coupon
e. 10-year, 5 percent coupon
Homework Answers
d. 10-year, zero coupon
The longer the duration the more sensitive to interest rates. A zero coupon bond has a duration equal to its time to maturity.
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Which one of the following bonds is the most sensitive to
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