Question
Jones is considering an investment in two bonds. Bond A is a zero-coupon bond that matures in 10 years, and Bond B is a coupon
Jones is considering an investment in two bonds. Bond A is a zero-coupon bond that matures in 10 years, and Bond B is a coupon paying bond that matures in 10 years. Both bonds have a face value of $1000 and a yield-to-maturity of 9% APR compounded semi-annually. Given this information, you can tell your client that (Bond A or B)is more sensitive to interest rate changes, so that if interest rates increase this bond will have a (larger percentage increase", "smaller percentage increase", "larger percentage decrease", "smaller percentage decrease")
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