Q3

Which of the following statements is CORRECT ()a) The longer the time to maturity, the smaller the change in the value of a bond in response to a given change in interest rates. Ob) The shorter the time to maturity, the greater the change in the value of a bond in response to a given change in interest rates, other things held constant. (c) The time to maturity does not affect the change in the value of a bond in response to a given change in interest rates. d) You hold two bonds, a 10-year, zero coupon, issue and a 10-year bond that pays a 6% annual coupon. The same market rate, 6%, applies to both bonds. If the market rate rises from its current level, the zero coupon bond will experience the larger percentage decline. ()You hold two bonds. One is a 10-year, zero coupon, bond and the other is a 10-year bond that pays a 6% annual coupon. The same market rate, 6%, applies to both bonds. If the market rate rises from the current level, the zero coupon bond will experience the smaller percentage decline