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Consider the following bonds: Bond Coupon Rate (annual payments) Maturity (years) A 0.0 % 15 B 0.0 % 10 C 4.2 % 15 D 7.6

Consider the following bonds:

Bond Coupon Rate (annual payments) Maturity (years)

A 0.0 % 15

B 0.0 % 10

C 4.2 % 15

D 7.6 % 10

Which of the bonds A to D is most sensitive to a 1 % drop in interest rates from 6.3 % to 5.3 %? Which bond is least sensitive?

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