Which of the following two bonds is more price sensitive to changes in interest rates?

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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
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