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Suppose a zero coupon bond with 2.5 years to maturity has a yield to maturity of 25%per annum. A 3-year maturity annual-pay coupon bond has
Suppose a zero coupon bond with 2.5 years to maturity has a yield to maturity of 25%per annum. A 3-year maturity annual-pay coupon bond has a face value of $1000 and a 25% coupon rate. The coupon bond also has a yield to maturity of 25%. Does the longer maturity bond have a larger interest rate sensitivity? A. There is not enough information B. No, the shorter maturity bond has a larger interest rate sensitivity ok C. No, the two bonds have the same interest rate sensitivity D. Yes
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