Bond Duration Q

CFA Level I Fixed Income
#1

Which of the follow would bethebestonetoowniftheyieldcurve shifts down by 50 basis points at all maturities? A. 4-year8%,8%YTM. B. 5-year8%,7.5%YTM. . 5-year8.5%,8%YTM am confused now please help me understand this thank

#2

Is the answer B?

#3

prices of low coupon bonds or bonds with long maturity react to changes in interest rates stronger than prices of high coupon bonds or bonds with short maturity.

so investors prefer to have bond B

#4

Longer maturity, longer duration.

Lower coupon, longer duration.

Lower YTM, longer duration.

Answer is B.

#5

Thanks!

#6

My pleasure.