Which of the Following Bonds Would Have the Greatest Percentage

question 29

Multiple Choice

Which of the following bonds would have the greatest percentage increase in value if all interest rates fall by 1%?

• A) 10-year, zero coupon bond.
• B) 20-year, 10% coupon bond.
• C) 20-year, 5% coupon bond.
• D) 1-year, 10% coupon bond.
• E) 20-year, zero coupon bond.