Price risk Answer: a Diff: M
32. Which of the following Treasury bonds will have the largest amount of interest rate risk (price risk)?
a. A 7 percent coupon bond that matures in 12 years.
b. A 9 percent coupon bond that matures in 10 years.
c. A 12 percent coupon bond that matures in 7 years.
d. A 7 percent coupon bond that matures in 9 years.
e. A 10 percent coupon bond that matures in 10 years.
Price risk Answer: a Diff: M
33. All treasury securities have a yield to maturity of 7 percent--so the yield curve is flat. If the yield to maturity on all Treasuries were to decline to 6 percent, which of the following bonds would have the largest percentage increase in price?
a. 15-year zero coupon Treasury bond.
b. 12-year Treasury bond with a 10 percent annual coupon.
c. 15-year Treasury bond with a 12 percent annual coupon.
d. 2-year zero coupon Treasury bond.
e. 2-year Treasury bond with a 15 percent annual coupon.
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