Most sensitive to changes in interest rates

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1. Bond A has 10-years to maturity and a coupon rate of 4%. Bond B has 5-years to maturity and a coupon rate of 5%. Bond C has 10-years to maturity and a coupon rate of 6%. Which bond is likely to be most sensitive to changes in interest rates?

2. An IPO was priced to sell at $23 a share and closed at $22 a share at the end of the first day of trading. The underwriting spread was 7% of the offer price and the legal, accounting and administrative costs were $1.6 million. What was the total percentage cost of the issue as a percentage of the market value at the end of the first day if 250,000 shares were offered?

Reference no: EM132023336

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