If its yield to maturity declined by 1%, which of the following bonds would have the largest percentage increase in value?
A. A 1-year bond with an 8% coupon.
B. A 10-year bond with an 8% coupon.
C. A 10-year bond with a 12% coupon.
D. A 10-year zero coupon bond.
E. A 1-year zero coupon bond.
Answer: D
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