Chapter 01: Role of Financial Markets and Institutions

(4) Long-term bonds have greater interest rate risk than short-term bonds (5) The sensitivity of a bond’s value to changing interest rates depends not only on the length of time to maturity, but also on the pattern of cash flows provided by the bond (or coupon rates) Figure 5-2: Time Path of the Value for Different Bonds. Figure 5-4: Value of ... ................
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