Given two otherwise identical bonds when interest
Given two otherwise identical bonds, when interest rates rise, the price of Bond A declines more than the price of Bond B.Compared to Bond B, Bond A most likely:
A.is callable.
B.has a lower coupon.
C.has a shorter maturity.
参考解答
406***101
2024-11-14 17:55:29
Ans:B;
Since Bond A declines more than the price of Bond B when interest rates rise, Bond A has greater price sensitivity to changes in interest rates and thus greater interest rate risk/duration than Bond B.
B is correct. The lower the coupon rate, the greater the bond’s price sensitivity to changes in interest rates.
A in not correct. The presence of an embedded option decreases the bond’s price sensitivity to changes in interest rates.
C is not correct. The longer the maturity, the greater the bond’s price sensitivity to changes in interest rates.
相似问题
A fixed income portfolio manager owns a $4 million
A fixed income portfolio manager owns a $4 million par value non-callable bond The bond’s duration is 5 4 and the current
A level payment fixed-rate fully amortizing mort
A level payment, fixed-rate, fully amortizing mortgage loan for $220,000 is obtained with a term of 15 years, a mortgage ra
Which of the following statements about debt secur
Which of the following statements about debt securities is most likely correct?A Insured bonds are bonds collateralized by a
If an institutional investor wants to borrow money
If an institutional investor wants to borrow money for 30 days to finance a bond purchase, which of these is most likely to be the lowest loan rate available?A Term repo rateB Call money rateC Broker loan rate
Which embedded option is most beneficial to a bond
Which embedded option is most beneficial to a bond issuer?A A conversion privilege B A floor on a floating rate bond C An accelerated sinking fund provision
