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Which of the following two bonds is more price-sensitive to changes in interest rates 1) A par value bond, X, with 5 years tomaturity and a 10%...

Which of the following two bonds is more price-sensitive to changes in interest rates


1) A par value bond, X, with 5 years tomaturity and a 10% coupon rate.


and the second bond is


2) A zero-coupon bond, Y, with 5 years to maturity and a 10% yield-to-maturity.


a) Bond Y because of the lower duration.

b) Bond X because of the longer duration.

c) Bond X because of the lower duration.

d) It is impossible to tell without further information

e) Bond Y because of the longer duration.


Which one of the following $1000 par value 12% annual coupon bonds experiences a price change of $23 when the required yield changes by 50 basis points, assuming they are initially trading at par, and using the modified duration approximation?


a) A bond with a Macaulay duration of 2.30 years

b) A bond with a Macaulay duration of 6.00 years

c) A bond with a Macaulay duration of 4.88 years

d) A bond with a Macaulay duration of 4.60 years

e) A bond with a Macaulay duration of 5.15 years

Top Answer

e) Bond Y because of the longer... View the full answer

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