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Find which of the bonds will decline most in price

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Problem 1: Interest rates have increased by 50 basis points (0.5%). Which of the following bonds will decline most in price? All of the bonds have AA ratings.

a. PV = $2,000?[1.06]^0 + $2,000?[1.06]^1 + $2,000?[1.06]^2
b. PV = $2,000?[1.06]^1 + $2,000?[1.06]^2 + $2,000?[1.06]^3
c. PV = $2,000?[1.06]^2 + $2,000?[1.06]^3 + $2,000?[1.06]^4
d. PV = $2,000 + $2,000?[1.06]^-1 + $2,000?[1.06]^-2

 

Reference no: EM132955463

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