Which bond would you have expect to have a more pronounced

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Reference no: EM132033714

You have two bonds - Bond X and Bond Y. Both have initial YTM of 10% and both have time to maturity of 25 years. Bond X has a 6% coupon while Bond Y has a 3% coupon.

Let's assume that the market interest rates rise by 2%. Which bond would you have expect to have a more pronounced movement in its value and why?

Reference no: EM132033714

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