Asked by Vicky Geurinckx on Jul 05, 2024
Verified
Holding other factors constant, the interest-rate risk of a coupon bond is lower when the bond's
A) term to maturity is lower.
B) coupon rate is higher.
C) yield to maturity is lower.
D) term to maturity is lower and coupon rate is higher.
E) All of the options are correct.
Interest-Rate Risk
The potential for investment losses due to fluctuations in interest rates.
Coupon Bond
A type of bond that pays the holder a fixed interest rate (coupon) over its lifetime, and the principal is repaid at maturity.
Yield To Maturity
The total return anticipated on a bond if held until its maturity date, taking into account its current market price, par value, coupon interest rate, and time to maturity.
- Catalog the determinants for bond duration shifts and fluctuations in price.
Verified Answer
Learning Objectives
- Catalog the determinants for bond duration shifts and fluctuations in price.
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