1. Which one of the following bonds is the least sensitive to interest rate risk? A. 1-year; 4 percent coupon B. 1-y...

Question

Question

1. Which one of the following bonds is the least sensitive to interest rate risk? A. 1-year; 4 percent coupon B. 1-year; 6 pe

Answer 1

Answer #1

1. Bonds with high maturity (long term) are more sensitive.
Bonds with lower coupon rate are more sensitive to Interest rate risk.

Answer: E. 7 years, 4% coupon.

2. YTM: It is the discount rate at which present value of a bond’s
promised cash flows is equal to its market price is the bond.

YTM = 13.58%

со 10 от 200 = - с+9 m) С+чузо Что? - С. 7 8е 11. (sem aлмal) Ч m = = чт” х2 13. 58.1. Chora al)

Answer 2

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