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a) Explain why the time-to-maturity, coupon rate and coupon frequency affect a bond's market risk. Which of these characteristics is going to be most important
a) Explain why the time-to-maturity, coupon rate and coupon frequency affect a bond's market risk. Which of these characteristics is going to be most important in determining the level of market risk? b) Would the duration approximation method of calculating Value-at-Risk be more accurate for a 1 year bond or a 10 year bond? Explain the reasoning for your choice.
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