A 20-year original maturity bond with 1 year left to maturity has more interest rate price risk than a 10-year original maturity bond with 1 year left to maturity. (Assume that the bonds have equal default risk and equal coupon rates.)?
Answer the following statement true (T) or false (F)
False
The longer the maturity of a bond, the more significantly its price changes in response to a given change in interest rates. Thus, if two bonds have exactly the same risk of default, the bond with the longer maturity typically is exposed to more price risk from a change in interest rates. See 6-5: Interest Rates and Bond Values
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