Question
An investor holds two bonds, one with five years until maturity and the other with 15 years until maturity. The face values and coupon rates
An investor holds two bonds, one with five years until maturity and the other with 15 years until maturity. The face values and coupon rates for both of them are the same. Which of the following is more likely if YTM suddenly drops by 1%?
- The 15-year bond will increase more in price.
- The 5-year bond will increase more in price.
- The changes in price for both will be about the same.
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Pricing And Hedging Financial Derivatives A Guide For Practitioners
Authors: Leonardo Marroni, Irene Perdomo
1st Edition
1119953715, 978-1119953715
