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Consider the following bonds. Bond Maturity (years) 10 A B Coupon Rate (annual payments) 0.0% 0.0% 3.6% 7.8% 15 15 D 10 Which of the
Consider the following bonds. Bond Maturity (years) 10 A B Coupon Rate (annual payments) 0.0% 0.0% 3.6% 7.8% 15 15 D 10 Which of the bonds A to D is most sensitive to a 1% drop in interest rates from 6.6% to 5.6%? Which bond is least sensitive? Provide an intuitive explanation for your answer. Bond is most sensitive. (Select from the drop-down menu.) Bond is the least sensitive. (Select from the drop-down menu.) Intuitively, V coupon rates and a maturity typically lower a bond's interest rate sensitivity
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