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18 April, 06:23

Which of the following bonds is the most sensitive to changes in market interest rates? A) 5-year, zero couponB) 5-year, 5 percent couponC) 5-year, 8 percent couponD) 10-year, zero couponE) 10-year, 5 percent coupon

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  1. 18 April, 06:54
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    D) 10-year, zero coupon

    Explanation:

    The zero coupon bonds with longer maturity period are more sensitive to interest rate changes than coupon payments bonds with the same maturity date and zero coupon bonds with shorter maturity periods.
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