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

question 12

Multiple Choice

Which of the following bonds will be least sensitive to a change in interest rates?

• A)a 30-year bond with a $1 000 face value whose yield to maturity is 5.5% and coupon rate is 6.4% APR paid annually
• B)a 10-year bond with a $2 000 face value whose yield to maturity is 5.8% and coupon rate is 5.8% APR paid semi-annually
• C)a 20-year bond with a $3 000 face value whose yield to maturity is 6.0% and coupon rate is 5.4% APR paid semi-annually
• D)a 15-year bond with a $5 000 face value whose yield to maturity is 7.4% and coupon rate is 6.2% APR paid annually

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Definitions:

Collect Like Terms

In algebra, to combine terms that have the same variables raised to the same power.

Simplify

To make (something) simpler or easier to understand or do.

Expression

In mathematics, a combination of symbols that represent a quantity or a relationship between quantities.

Simplify

To make something easier to understand or do.