Consider three bonds: Bond A: 7%coupon, 15 years Bond B: 10% coupon , 8 years Bo

Question

Consider three bonds: Bond A: 7%coupon, 15 years Bond B: 10% coupon , 8 years Bond C: 7% coupon , 20 years Which the correct ranking from highest to lowest 1- B,A,C 2- A,C,B 3- A,B,C 4- none of the answers are correct 5- B,C,A Consider three bonds: Bond A: 7%coupon, 15 years Bond B: 10% coupon , 8 years Bond C: 7% coupon , 20 years Which the correct ranking from highest to lowest 1- B,A,C 2- A,C,B 3- A,B,C 4- none of the answers are correct 5- B,C,A Bond A: 7%coupon, 15 years Bond B: 10% coupon , 8 years Bond C: 7% coupon , 20 years Which the correct ranking from highest to lowest 1- B,A,C 2- A,C,B 3- A,B,C 4- none of the answers are correct 5- B,C,A

Explanation / Answer

correct option is "1 "

Ranking 1 - Bond B     [Lowest duration with highest return]

Ranking 2=Bond A     [Duration lower than C]

Ranking 3 -= Bond C

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