You want to invest in a bond with LOW interest rate risk. Your financial advisor offers...

You want to invest in a bond with LOW interest rate risk. Your financial advisor offers you two choices: Bond A has face value $1,000, YTM=5%, coupon rate 5% and 10 years to maturity; Bond B is a zero coupon bond, the face value is $1,000, YTM=5% and also matures in 10 years. Which bond has less interest rate risk?

A) the risk is the same for both bonds

B) Bond A

C)Bond B

D) Not enough information to answer the question

Solutions

Expert Solution

jeff jeffy answered 2 years ago

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