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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The solution explains sensitivity of bonds to change in interest rates
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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 ...
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