Which of the following two bonds is more price sensitive to changes in interest rates? 1) A par value bond, X, with 5 years to maturity and a 10% coupon rate. 2) A zero-coupon bond, Y, with 5 years to maturity and a 10% yield to maturity. O Bond X because of the higher yield to maturity Bond Y because of the longer duration Both have the same sensitivity because both have the same yield to maturity. Bond X because of the longer time to maturity

Which of the following two bonds is more price sensitive to changes in interest rates? 1) A par value bond, X, with 5 years to maturity and a 10% coupon rate. 2) A zero-coupon bond, Y, with 5 years to maturity and a 10% yield to maturity. O Bond X because of the higher yield to maturity Bond Y because of the longer duration Both have the same sensitivity because both have the same yield to maturity. Bond X because of the longer time to maturity

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter4: Bond Valuation

Section: Chapter Questions

Problem 3Q: The rate of return on a bond held to its maturity date is called the bonds yield to maturity. If...

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