Assume That All Interest Rates in the Economy Decline from 10

question 78

Multiple Choice

Assume that all interest rates in the economy decline from 10% to 9%.Which of the following bonds would have the largest percentage increase in price?

• A) An 8-year bond with a 9% coupon.
• B) A 1-year bond with a 15% coupon.
• C) A 3-year bond with a 10% coupon.
• D) A 10-year zero coupon bond.
• E) A 10-year bond with a 10% coupon.

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