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Everything else equal, the __________ the maturity of a bond and the __________ the coupon, the greater the sensitivity of the bond's price to interest rate changes.

User Huddds
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Answer:

longer; lower

Step-by-step explanation:

bond is simply known as a debt security that entitles the issuer to pay interest (maybe semi-annually) and to repay the principal amount when the debt matures.

A coupon is simply the timely or periodic interest payments. Its rate is usually expressed as an annual rate per dollar of par value.

A bond interest rate affect its price in different ways. That is why the longer the maturity of a bond and the lower the coupon, the greater the sensitivity of the bond's price to interest rate changes.

User Nwaltham
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