Which of the following two bonds is more price sensitive to changes in interest rates?
1)A par value bond , X, with a 5-year-to-maturity and a 10% coupon rate.
2)A zero-coupon bond,Y, with a 5-year-to-maturityand a 10% yield to maturity
a)Bond X because of the higher yield to maturity
b)Bond X because of the longer time to maturity
c)Bond Y because of the longer duration
d)Both have the same sensitivity because both have the same yield to maturity
e)none of the above options
12 years ago
10
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