Which of the following bonds is most likely to exhibit the greatest interest rate risk, assuming that the yield curve is flat? Bond A is a 5%, 20-year bond with no embedded options. Bond B is a 6%, 18-year bond with no embedded options. Bond C is a 5.5%, 15-year bond with no embedded options.
A
Bond A
explanation
Bond A will exhibit the greatest interest rate, risk assuming the yield curve is flat, because it has the lowest coupon rate and the longest term to maturity.
Comments