Which of the Following Bonds Will Be Least Sensitive to a Change

question 6

Multiple Choice

Which of the following bonds will be least sensitive to a change in interest rates?

• A) a ten-year bond with a $2000 face value whose yield to maturity is 5.8% and coupon rate is 5.8% APR paid semiannually
• B) a 30-year bond with a $1000 face value whose yield to maturity is 5.5% and coupon rate is 6.4% APR paid annually
• C) a 20-year bond with a $3000 face value whose yield to maturity is 6.0% and coupon rate is 5.4% APR paid semiannually
• D) a 15-year bond with a $5000 face value whose yield to maturity is 7.4% and coupon rate is 6.2% APR paid annually

---

Definitions:

Created

Brought into existence; the act or process of bringing something into being that did not exist before.

Rightful Owner

A person or entity that legally possesses property or title.

Constructive Trust

A legal remedy imposed by a court to prevent unjust enrichment by transferring property from the person who unjustly benefits to the rightful owner.

Settlor

The individual who creates a trust by legally transferring assets into it, setting the terms for its management and distribution.