Which of the following bonds will have the greatest percentage increase in value if all interest rates decreas? and Corgi Bond Cars

Which of the following bonds will have the greatest percentage increase in value if all interest rates decreas?

Which of the following bonds will have the greatest percentage increase in value if all interest rates decrease by 1%?
20-year, zero coupon bond, a 10-year, zero coupon bond, a 20-year, 10% coupon bond, a 20-year, 5% coupon bond, or a 1-year, 10% coupon bond.


Bond best answer:

Answer by DaninCT
The 20-year, zero coupon bond because it has a duration of 20 years.

The price change of a bond is generally proportional to:

- duration x change in interest rates

Note: 20-year, 10% or 5% coupon bonds would have a duration less than 20 years, that is why the 20-year, zero coupon would move the most in price when interest rates change.

Bond

Corgi Bond Cars


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My assorted range of Corgi Bond cars

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