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Two bonds are available for purchase in the financial markets. The first bond, Bond A, is a two-year, $1,000 bond that pays semi-annual coupons at
Two bonds are available for purchase in the financial markets.
The first bond, Bond A, is a two-year, $1,000 bond that pays semi-annual coupons at a rate of 10%.
The second bond, Bond B, is a three-year, $1,000 bond that pays annual coupons at a rate of 10%.
- What is the duration of the bond A if the current yield-to-maturity is 10 percent?
- What is the duration of the bond B if the current yield-to-maturity is 10 percent?
- The price of which bond is more sensitive to changes in interest rates?
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