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At market interest rate level of 2%, a ten-year and a 30-year bond ( both with 8% coupon rates and semiannual payment ) are selling
At market interest rate level of 2%, a ten-year and a 30-year bond ( both with 8% coupon rates and semiannual payment ) are selling at the prices $1,541.37 and $2,348.65, respectively. If you expected that interest rate will jump to 10% from the current level, which bond is risker and which bond is more profitable if interest rate drop significantly? A. Ten-year bond; Ten-year bond B. 30-year bond; Ten-year bond C. Ten-year bond; 30-year bond D. 30-year bond; 30-year bond
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