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    Rank the sensitivity of bonds

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    Rank the sensitivity of the following from most sensitive to an interest rate change to the least sensitive.

    1. 8% coupon, non callable 20 year maturity, par bond
    2. 9% coupon, currently callable 20 year maturity, premium bond
    3. zero coupon, 30 year maturity bond

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    Solution Preview

    The sensitivity is higher, more is the maturity and sensitivity is higher, lower is the coupon rate. Based on this the rank from most sensitive to ...

    Solution Summary

    The solution explains sensitivity of bonds to change in interest rates