Holding other factors constant, which one of the following bonds has the smallest price volatility?

A) 7-year, 0% coupon bond
B) 7-year, 12% coupon bond
C) 7 year, 14% coupon bond
D) 7-year, 10% coupon bond
E) Cannot tell from the information given

Price Volatility

Refers to the degree of variation in the price of a financial instrument over time, indicating the risk or uncertainty of its value change.

Coupon Bond

A debt security that pays interest to the holder on a regular basis until its maturity, when the principal is also repaid.

Maturity

The date when a financial instrument (e.g., bond, loan) reaches its final installment and is to be paid off completely.