Interest rate risk-consider two bonds

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Interest Rate Risk. Consider two bonds, a 3-year bond paying an annual coupon of 5% and a 10-year bond also with an annual coupon of 5%. Both currently sell at face value. Now suppose interest rates rise to 10%. (LO6-3) a. What is the new price of the 3-year bonds? b. What is the new price of the 10-year bonds? c. Do you conclude that long-term or short-term bonds are more sensitive to a change in interest rates?

Reference no: EM13878450

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