Calculate for each bond the percentage price change

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A zero-coupon bond with 2.5 years to maturity has a yield to maturity of 25% per annum. A 3-year maturity annual-pay coupon bond has a face value of $1000 and a 25% coupon rate. The coupon bond also has a yield to maturity of 25%. Does the longer maturity bond have larger interest rate sensitivity? Why or why not? Calculate for each bond the percentage price change associated with a change of yield to maturity from 25% to 26% (using the duration formula).

Reference no: EM13732315

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