p of answer choices A. The price of a zero-coupon bond with four years until expiry is going to be more sensitive to changes in market yields than the price of a coupon paying bond issued by the same company with the same term to expiry. B. Holding all other factors constant, the longer the term to expiry, the less sensitive a bond’s price is to changing market yields.
p of answer choices A. The price of a zero-coupon bond with four years until expiry is going to be more sensitive to changes in market yields than the price of a coupon paying bond issued by the same company with the same term to expiry. B. Holding all other factors constant, the longer the term to expiry, the less sensitive a bond’s price is to changing market yields.
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter4: Bond Valuation
Section: Chapter Questions
Problem 3Q: The rate of return on a bond held to its maturity date is called the bonds yield to maturity. If...
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Question
Which of the following statements correctly describes the sensitivity of a bond’s price to a change in market yields?
Group of answer choices
A. The price of a zero-coupon bond with four years until expiry is going to be more sensitive to changes in market yields than the price of a coupon paying bond issued by the same company with the same term to expiry.
B. Holding all other factors constant, the longer the term to expiry, the less sensitive a bond’s price is to changing market yields.
C. Holding all other factors constant, the higher the coupon rate, the more sensitive is a bond’s price to changing market yields.
D. More than one of the other statements are correct.
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