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:

Specialized Cells

Cells that have developed unique characteristics and functions through the process of differentiation.

Absolute Threshold

The minimal intensity of a stimulus that is required to be detected 50% of the time.

Difference Threshold

The smallest difference in stimulation that can be reliably detected by an observer when two stimuli are compared; also called just noticeable difference (jnd).

Sensory Sensitivity

A condition where individuals are extremely responsive to environmental stimuli such as sounds, lights, and textures.