Both Bond Short and Bond Long have 10 percent coupons, make semiannual payments,

Question

Both Bond Short and Bond Long have 10 percent coupons, make semiannual payments, and are priced at par value.  Bond Short has 3 years to maturity, whereas Bond Long has 13 years to maturity. If interest rates suddenly rises by 2 percent, which of the following statements is most correct? Question 21 options: Bond Short Both Bond Short and Bond Long have 10 percent coupons, make semiannual payments, and are priced at par value.  Bond Short has 3 years to maturity, whereas Bond Long has 13 years to maturity. If interest rates suddenly rises by 2 percent, which of the following statements is most correct? Both Bond Short and Bond Long have 10 percent coupons, make semiannual payments, and are priced at par value.  Bond Short has 3 years to maturity, whereas Bond Long has 13 years to maturity. If interest rates suddenly rises by 2 percent, which of the following statements is most correct? Bond Short Bond Short Bond Short

Explanation / Answer

The prices of both bonds decline, while Bond Long declines more than Short.

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