19. Everything else equal, the price of which of the following bonds would be least sensitive to interest rates falling by 2%?

A.A bond with 10 -yr maturity and a 6% coupon rate.

B.A bond with 5-yr maturity and a 4% coupon rate.

C.A bond with 5-yr maturity and a 6% coupon rate.

D.A bond with 10-yr maturity and a 4% coupon rate.

E.Cannot be determined.

20.You expect bond yields to decrease in the near future. You are advising your parents which of the bonds listed below to purchase. All of the bonds have been issued by the Government of Canada. Your parents wish to maximize their rate of return.

I.Zero coupon bond with 20 years to maturity

II. Zero coupon bond with 10 years to maturity

III. 20 year coupon bond, with a coupon rate of 10%

IV.10 year coupon bond, with a coupon rate of 10%

A.I only

B.II only

C.III only

D.IV only

E.Cant be determined

19. Everything else equal, the price of which of the following bonds would be least sensitive to interest rates falling by 2%?

A.A bond with 10 -yr maturity and a 6% coupon rate.

B.A bond with 5-yr maturity and a 4% coupon rate.

C.A bond with 5-yr maturity and a 6% coupon rate.

D.A bond with 10-yr maturity and a 4% coupon rate.

E.Cannot be determined.

. Which of the following regular coupon bonds will be least sensitive to changes in interest rates? All of the bonds have a face value of $1,000. Coupons are paid annually. The term structure is flat and the current yield to maturity is 8%.

A.15 years to maturity, 6% coupon rate

B.15 years to maturity, 12% coupon rate

C.12 years to maturity, 6% coupon rate

D.10 years to maturity, 6% coupon rate

E.10 years to maturity, 12% coupon rate