Which of the following bonds would have the greatest percentage increase in value if all interest rates in the economy fall by 1%?
A. 10-year, zero coupon bond.
B. 20-year, 10% coupon bond.
C. 20-year, 5% coupon bond.
D. 1-year, 10% coupon bond.
E. 20-year, zero coupon bond.
Answer: E
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