Question

Financial Derivative And Risk Management

Which of the following bonds has the greatest price risk?

a. A 10-year $100 annuity.

b. A 10-year, $1,000 face value, zero coupon bond.

c. A 10-year, $1,000 face value, 10% coupon bond with annual interest payments.

d. All 10-vear bonds have the same price risk since they have the same maturity,

e. A 10-year, $1,000 face value, 10% coupon bond with semiannual interest payments.


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