Everything else being equal, the price of which of the following bonds is most sensitive to interest rate changes? A 15-year zero-coupon bond B) A 15-year 4% coupon bond C) A 15-year 8% coupon bond D) A 20-year zero-coupon bond E) A 20-year 8% coupon bond

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Bond Valuation

Bond valuation are the notes issued by the corporation to raise long-term funds for the business. The corporations are required to pay the interest on such liabilities at a specified rate of interest (termed as coupon rate) at specified dates which may be on semi-annual or annual basis. These interest payments may be in the form of coupons.