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TB MC Qu. 16-57 Which of the following two bonds is more... Which of the following two bonds is more price sensitive to changes in

TB MC Qu. 16-57 Which of the following two bonds is more...

Which of the following two bonds is more price sensitive to changes in interest rates? 1) A par-value bond, D, with a 2 year to maturity and an 8% coupon rate. 2) A zero-coupon bond, E, with a 2 year to maturity and an 8% yield to maturity.

Multiple Choice

Bond D because of the higher yield to maturity

Bond E because of the longer duration

Bond D because of the longer time to maturity

Both have the same sensitivity because both have the same yield to maturity.

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