Which of the Following Two Bonds Is More Price Sensitive

question 26

Multiple Choice

Which of the following two bonds is more price sensitive to changes in interest rates
1) A par value bond, D, with a 2-year-to-maturity and a 8% coupon rate.
2) A zero-coupon bond, E, with a 2-year-to-maturity and a 8% yield to maturity.

• A)Bond D because of the higher yield to maturity.
• B)Bond E because of the longer duration.
• C)Bond D because of the longer time to maturity.
• D)Both have the same sensitivity because both have the same yield to maturity.

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Definitions:

Chronic Kidney Disease

Chronic Kidney Disease is a long-term condition where the kidneys lose their ability to filter waste and excess fluids from the blood effectively.

Normal Glomerular Filtration Rate

A measure of kidney function indicating how well the glomeruli filter blood per unit time.

Chronic Interstitial Cystitis

A long-term condition characterized by bladder pressure, bladder pain, and sometimes pelvic pain.

Hematuria

The presence of blood in the urine, which can be a sign of various conditions affecting the urinary tract or kidneys.