different bonds trade at different yields


Different bonds trade at different yields though the coupon rate, maturity, and embedded options are same for them. Assuming that all the other bond characteristics are the same, the bond with a lower yield is more volatile in terms of both percentage price change and absolute price change. This implies, at a given change in the interest rates in the market, price sensitivity becomes lower at a higher rate of interest and vice versa in case of lower rate of interest. 

Request for Solution File

Ask an Expert for Answer!!
Financial Management: different bonds trade at different yields
Reference No:- TGS0159261

Expected delivery within 24 Hours