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Author Question: An investor has two bonds in their investment portfolio. Bond A matures in 8 years and Bond B ... (Read 29 times)

903f23fj0

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on: Aug 7, 2023

Question 1

An 18-year corporate bond was issued 11 years ago. What is it today?

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a medium-term bond with 7 years to maturity


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a medium-term bond with 18 years to maturity


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a long-term bond with 7 years to maturity


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a long-term bond with 18 years to maturity



Question 2

An investor has two bonds in their investment portfolio. Bond A matures in 8 years and Bond B matures in 20 years. All else equal, which bond would have a greater price sensitivity to a given change in interest rates?

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Bond A would have a greater sensitivity to a given change in interest rates due to its relative shorter term to maturity.


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Bond A and Bond B would have the same price sensitivity since term to maturity would not affect bond price.


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Bond B would have a greater sensitivity to a given change in interest rates as it has a longer term to maturity.


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Bond A and Bond B would have no price sensitivity since a given change in interest rates would not affect bond price.

Financial Management: Theory and Practice ¦ Brigham, Ehrhardt, Gessaroli, Nason ¦ 4th Edition
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Marked as best answer by 903f23fj0 on Aug 7, 2023

Mynameisrandom

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Reply #1 on: Aug 7, 2023
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903f23fj0

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Reply 2 on: Aug 7, 2023
Wow, this really help

diana chang

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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