Question
You own a 15-year bond and a 20-year bond, both of which are non-callable bond and pay a coupon of 5%. What is true about
You own a 15-year bond and a 20-year bond, both of which are non-callable bond and pay a coupon of 5%. What is true about the change in value of your bonds if interest rate rises from 7% to 11%?
The value of the 20-yr bond will decrease by $17 more than the 15-yr bond
The value of the 20-yr bond will decrease by $11 more than the 15-yr bond
The value of the 20-yr bond will decrease by $38 more than the 15-yr bond
The value of the 20-yr bond will increase by $24 more than the 15-yr bond
The value of the 20-yr bond will increase by $11 more than the 15-yr bond
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Financial Institutions Management A Risk Management Approach
Authors: Marcia Cornett, Patricia McGraw, Anthony Saunders
8th edition
978-0078034800, 78034809, 978-0071051590
