Which of the following bond terms are generally positively related to bond price volatility?
I. Coupon rate
II. Maturity
III. YTM
IV. Payment frequency
A)II and IV only
B)I and III only
C)II and III only
D)II only
E)II,III,and IV only

Question

Quizplus · Accepted Answer

II only. Bond price volatility is generally positively related to the bond's maturity. Longer maturity bonds are more sensitive to interest rate changes, leading to higher volatility in their prices. Coupon rate, YTM (Yield to Maturity), and payment frequency do not have a direct positive relationship with bond price volatility in the same way maturity does.

Which of the Following Bond Terms Are Generally Positively Related