All of the following bonds have 5 years to go to maturity. Which would have the greatest price change in response to a change in interest rates?

All of the following bonds have 5 years to go to maturity. Which would have the greatest price change in response to a change in interest rates?



A) 7-½%, A rated, price 102.

B) 7-½%, B rated, price 88.

C) 7-½%, BBB rated, price 95.

D) 7-½%, AA rated, price 108.



Answer: B) 7-½%, B rated, price 88.


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