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    if its yield to maturity declined by 1%, which of the following bonds would have the largest percentage increase in value?

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    If its yield to maturity declined by 1%, which of the following bonds would have the largest percentage increase in value? A. a 10

    Answer to: If its yield to maturity declined by 1%, which of the following bonds would have the largest percentage increase in value? A. a 10-year...

    Interest rate risk

    If its yield to maturity declined by 1%, which of the following bonds would have the largest...

    If its yield to maturity declined by 1%, which of the following bonds would have the largest... Question:

    If its yield to maturity declined by 1%, which of the following bonds would have the largest percentage increase in value?

    A. a 10-year zero coupon bond.

    B. a 1-year zero coupon bond.

    C. a 1-year bond with an 8% coupon.

    D. a 10-year bond with an 8% coupon.

    Duration and Interest Rate Risk:

    A long duration for a bond will see it be affected by an economy's interest rates. This is important for people who would like to invest in these instruments and keep an eye on the interest rates.

    Answer and Explanation:

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    The correct answer is A. a 10-year zero coupon bond.

    The duration of the zero coupon bond is highest among the bonds of same maturity. Duration is...

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    Interest Rate Risk: Definition, Formula & Models

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    Chapter 3 / Lesson 6

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    Interest rate risk is one type of risk that significantly affects bonds. Study the definition of interest rate risk, bond valuation basics, reinvestment rate risk, and learn if a risk can be avoided.

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