Explain what the term "bond price elasticity" means. Would bond price elasticity indicate that zero-coupon or high-coupon bonds with the same yield to maturity have a greater price sensitivity? Why? What does this mean for the market value volatility of zero-coupon Treasury bonds vs high-coupon Treasury bonds in mutual funds?
Explain what the term "bond price elasticity" means. Would bond price elasticity indicate that zero-coupon or high-coupon bonds with the same yield to maturity have a greater price sensitivity? Why? What does this mean for the market value volatility of zero-coupon Treasury bonds vs high-coupon Treasury bonds in mutual funds?
Chapter31: Capital Markets
Section: Chapter Questions
Problem 9E
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