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

question 33

Multiple Choice

Which of the following bonds will be most sensitive to a change in interest rates if all bonds have the same initial yield to maturity?

• A) a ten-year bond with a $1,000 face value whose coupon rate is 5.8% APR paid semiannually
• B) a ten-year bond with a $1,000 face value whose coupon rate is 7.4% APR paid semiannually
• C) a 20-year bond with a $1,000 face value whose coupon rate is 5.8% APR paid semiannually
• D) a 20-year bond with a $1,000 face value whose coupon rate is 7.4% APR paid semiannually

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Definitions:

Architect

A professional who designs buildings and in many cases also supervises their construction.

Lactovegetarian

A person who follows a vegetarian diet while still consuming dairy products.

Lacto-ovovegetarian

A dietary choice that includes dairy products and eggs but excludes meat.

Vegan

Pertaining to a diet or lifestyle that excludes all animal products, including meat, dairy, and eggs, for ethical, health, or environmental reasons.