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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.

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Question:

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.

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