Leah is considering repositioning some of the investments in her bond portfolio. Of the bonds shown below which one has the longest duration and is therefore most sensitive to interest rate changes. Assume that they are all purchased this year and current interest rates are 6.2% Bond A: 6.25% coupon Treasury bond with a current price $1,050 that matures in 2030 Bond B: Zero coupon Treasury bond with a current price $789 that matures in 2030 Bond C: 4.01% AA corporate debenture with a current price $949 that matures in 2030 Bond A Bond B Bond C O They all have the same duration
Leah is considering repositioning some of the investments in her bond portfolio. Of the bonds shown below which one has the longest duration and is therefore most sensitive to interest rate changes. Assume that they are all purchased this year and current interest rates are 6.2% Bond A: 6.25% coupon Treasury bond with a current price $1,050 that matures in 2030 Bond B: Zero coupon Treasury bond with a current price $789 that matures in 2030 Bond C: 4.01% AA corporate debenture with a current price $949 that matures in 2030 Bond A Bond B Bond C O They all have the same duration
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Leah is considering repositioning some of the investments in her bond portfolio. Of the
bonds shown below which one has the longest duration and is therefore most sensitive to
interest rate changes. Assume that they are all purchased this year and current interest rates
are 6.2%
Bond A: 6.25% coupon Treasury bond with a current price $1,050 that matures in 2030
Bond B: Zero coupon Treasury bond with a current price $789 that matures in 2030
Bond C: 4.01% AA corporate debenture with a current price $949 that matures in 2030
Bond A
Bond B
Bond C
O They all have the same duration
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