Greater interest rate risk and briefly explain why

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Tom has an investment horizon of 4 years (this means he will plan to sell or liquidate his investments at the end of 4 years) and is considering two possible bond investments. Bond A, is a 6-year, 4% annual coupon bond that is currently trading at a YTM of 6%. Bond B, is a 10-years, 3% annual coupon bond that is also trading at a YTM of 6%. Tom understands that he faces interest rate risk or the risk that interest rates will change. Which of the two bonds has greater interest rate risk and briefly explain why.

Reference no: EM132390692

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