Consider two bonds A and B, of same coupon and both with semi-annual interest payments frequency. Bond A has a maturity
Posted: Sun Apr 10, 2022 8:42 am
Consider two bonds A and B, of same coupon and both with
semi-annual interest payments frequency. Bond A has a maturity of 5
years while B’s is 10 years. When the market interest rates
decline?
A) The value of bonds A and B drops and the value of A drops
more than that of B
B) The value of bonds A and B drops and the value of A drops
less than that of B
C) The value of bonds A and B rises and the value of A rises
more than that of B
D) The value of bonds A and B rises and the value of A rises
less than that of B
semi-annual interest payments frequency. Bond A has a maturity of 5
years while B’s is 10 years. When the market interest rates
decline?
A) The value of bonds A and B drops and the value of A drops
more than that of B
B) The value of bonds A and B drops and the value of A drops
less than that of B
C) The value of bonds A and B rises and the value of A rises
more than that of B
D) The value of bonds A and B rises and the value of A rises
less than that of B