Question
Bond A has a 7 % coupon rate and 17 years to maturity. Bond B has a 7.5 % coupon rate and 16 years to
Bond A has a 7 % coupon rate and 17 years to maturity. Bond B has a 7.5 % coupon rate and 16 years to maturity. Based on this information, which of the following statements is correct?
1. Bond B is more volatile than Bond A, just from the information given
2. Bond A is more volatile than Bond B, just from the information given
3. There is no way to tell which bond will be more volatile
4. You would need to compare the duration of the bonds to determine which will be the most volatile, and you would choose the bond with the smaller duration
5. You would need to compare duration of the bonds to determine which will be the most volatile, and you would choose the bond with the larger duration
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