p of answer choices A. The price of a zero-coupon bond with four years until expiry is going to be more sensitive to changes in market yields than the price of a coupon paying bond issued by the same company with the same term to expiry. B. Holding all other factors constant, the longer the term to expiry, the less sensitive a bond’s price is to changing market yields.
p of answer choices A. The price of a zero-coupon bond with four years until expiry is going to be more sensitive to changes in market yields than the price of a coupon paying bond issued by the same company with the same term to expiry. B. Holding all other factors constant, the longer the term to expiry, the less sensitive a bond’s price is to changing market yields.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Which of the following statements correctly describes the sensitivity of a bond’s price to a change in market yields?
Group of answer choices
A. The price of a zero-coupon bond with four years until expiry is going to be more sensitive to changes in market yields than the price of a coupon paying bond issued by the same company with the same term to expiry.
B. Holding all other factors constant, the longer the term to expiry, the less sensitive a bond’s price is to changing market yields.
C. Holding all other factors constant, the higher the coupon rate, the more sensitive is a bond’s price to changing market yields.
D. More than one of the other statements are correct.
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