Which Bond Is More Sensitive to an Interest Rate Change

question 39

Multiple Choice

Which bond is more sensitive to an interest rate change of 0.75%?
Bond A: YTM = 4.00%, Maturity = 8 years, Coupon = 6% or $60, Par Value = $1,000
Bond B: YTM = 3.50%, Maturity = 5 years, Coupon = 7% or $70, Par Value = $1,000

• A) A
• B) B
• C) Both the same
• D) Cannot be determined

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Definitions:

Controlling Behavior

Actions intended to dominate, manipulate, or dictate the behavior of others, often a sign of abusive relationships or personality disorders.

Hyperactive

Excessive physical activity or movements, inability to stay still, often associated with attention deficit hyperactivity disorder (ADHD).

Secluded

Being isolated or removed from social contact; placed in a situation of privacy or solitude.

Hyperactivity

An abnormal or excessive level of activity, often seen in disorders such as ADHD, characterized by restlessness and difficulty sitting still.