Answered step by step
Verified Expert Solution
Question
1 Approved Answer
I need to rate the following bonds from most price risk to low price risk. IF the interest rate increases by 1% 10 year bond
I need to rate the following bonds from most price risk to low price risk. IF the interest rate increases by 1%
10 year bond 5%
10 year bond zero coupon
5 year bond 5%
5 year bond 10 %
My answer is
10 years zero coupon
10 year 5%
5 year 10%
5 Year 5%
I thought because zero coupon doesn't pay any interest out, but it still could be affected because rising interest isn't good for bonds
thanks
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started