All other things equal,which of the following bond price is more sensitive to interest rate changes?
A) a 10 year bond with a 10% coupon
B) a 20 year bond with a 7% coupon
C) a 20 year bond with a 10% coupon
D) a 30 year bond with 7% coupon

Question

Quizplus · Accepted Answer

A bond's price sensitivity to interest rate changes, or its duration, increases with longer maturities and lower coupon rates. Among the options, a 30-year bond with a 7% coupon has the longest maturity and one of the lower coupon rates, making it the most sensitive to interest rate changes.

All Other Things Equal,which of the Following Bond Price Is