Question
Two 10 year bonds with a 5% YTM experience a sudden increase to 6% YTM. Bond A is a zero coupon bond -- a bond
Two 10 year bonds with a 5% YTM experience a sudden increase to 6% YTM. Bond A is a zero coupon bond -- a bond which pays no coupon -- while Bond B is a 5% coupon bond. Which bond experiences a larger percentage change in price? Why?
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Financial Economics
Authors: Zvi Bodie, Robert C Merton, David Cleeton
2nd Edition
0558785751, 9780558785758
