Compared with an otherwise identical amortizing se
Compared with an otherwise identical amortizing security, a zero-coupon bond will most likely have:
A.less reinvestment risk and the same interest rate risk.
B.less reinvestment risk and more interest rate risk.
C.the same reinvestment risk and the same interest rate risk.
参考解答
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2024-11-14 23:47:38
Ans:B;
Less reinvestment risk: An amortizing security is exposed to reinvestment risk since it receives periodic payments of both interest and principal that must be reinvested ; while a zero-coupon bond has no reinvestment risk since no cash flows are received that must be reinvested before maturity.
More interest rate risk: Because zero-coupon bonds do not have periodic cash flows, they have higher interest rate risk for a given maturity and a given change in market yields.
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