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Question
Assume that all interest rates in the economy decline from 10% to 9%. Which of the following bonds would have the largest percentage increase in price?a. A 1-year bond with a 15% coupon.
b. A 3-year bond with a 10% coupon.
c. A 10-year zero coupon bond.
d. A 10-year bond with a 10% coupon.
e. An 8-year bond with a 9% coupon.
Answer
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