Which of the following statements is CORRECT? A zero coupon bond of any maturity
ID: 2639803 • Letter: W
Question
Which of the following statements is CORRECT?
A zero coupon bond of any maturity will have more price risk than any coupon bond, even a perpetuity.
If their maturities and other characteristics were the same, a 5% coupon bond would have more price risk than a 10% coupon bond.
A 10-year coupon bond would have more reinvestment risk than a 5-year coupon bond, but all 10-year coupon bonds have the same amount of reinvestment risk.
A 10-year coupon bond would have more price risk than a 5-year coupon bond, but all 10-year coupon bonds have the same amount of price risk.
If their maturities and other characteristics were the same, a 5% coupon bond would have less price risk than a 10% coupon bond.
A zero coupon bond of any maturity will have more price risk than any coupon bond, even a perpetuity.
If their maturities and other characteristics were the same, a 5% coupon bond would have more price risk than a 10% coupon bond.
A 10-year coupon bond would have more reinvestment risk than a 5-year coupon bond, but all 10-year coupon bonds have the same amount of reinvestment risk.
A 10-year coupon bond would have more price risk than a 5-year coupon bond, but all 10-year coupon bonds have the same amount of price risk.
If their maturities and other characteristics were the same, a 5% coupon bond would have less price risk than a 10% coupon bond.
Explanation / Answer
If their maturities and other characteristics were the same, a 5% coupon bond would have more price risk than a 10% coupon bond.
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