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    Largest percentage increase in price

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    All treasury securities has a yield to maturity of 7%-- so the yield curve is flat. If the yield to maturity on all Treasuries were to decline to 6%, which of the following bonds would have the largest percentage increase in price and why?

    A. 15 year zero coupon Treasury bond.
    B. 12 year Treasury bond with a 10% annual coupon.
    C. 15 year Treasury bond with a 12 percent annual coupon.
    D. 2 year zero coupon Treasury bond.
    E. 2 year Treasury bond with a 15% annual coupon.

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    Solution Summary

    The solution explains which of the securities will have the largest percentage increase in price

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