Which bond will most likely experience the smallest percentage change in price if the market discount rates for all three bonds increase by 100 basis point?
Which bond will most likely experience the smallest percentage change in price if the market discount rates for all three bonds increase by 100 basis point?
Chapter5: Bond, Bond Valuation, And Interest Rates
Section: Chapter Questions
Problem 24SP
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Question
Transcribed Image Text:BOND PRICE
A
B
с
101.886 5%
100
6%
97.327 5%
COUPON TIME TO
RATE
O Bond C
Bond A
Which bond will most likely experience the smallest percentage change in
price if the market discount rates for all three bonds increase by 100 basis
point?
Bond B
MATURITY
2 years
2 years
3 years
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