Question
All other things being equal, the
(lower/higher) the coupon rate, the greater the interest rate risk.
(lower/higher) the coupon rate, the greater the interest rate risk.
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Answered by
GPT-4o mini
All other things being equal, the **lower** the coupon rate, the greater the interest rate risk.
This is because bonds with lower coupon rates are more sensitive to changes in interest rates. When interest rates rise, the prices of these bonds tend to fall more significantly compared to bonds with higher coupon rates.
This is because bonds with lower coupon rates are more sensitive to changes in interest rates. When interest rates rise, the prices of these bonds tend to fall more significantly compared to bonds with higher coupon rates.
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