Economics · Banking & Financial Markets
A long-term bond (maturity of 10 years) and a short-term bond (maturity of 2 years) both have a coupon rate of 6% and a face value of ₹1,000. If the market interest rate (YTM) suddenly increases by 1% for both bonds, which bond will experience the larger percentage decline in price?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
Share:
- 1The percentage decline depends entirely on the coupon rate rather than maturity.
- 2The long-term bond will experience a larger percentage decline.✓
- 3The short-term bond will experience a larger percentage decline.
- 4Both bonds will experience the exact same percentage decline.
Correct answer
The long-term bond will experience a larger percentage decline.
Download Single Question PDF
Save this question and verified answer as a clean study sheet with live clickable link.
👥
Share with Friends & Study Groups
Challenge your peer aspirants on WhatsApp or Telegram to solve this question!
Online Test Series
Start Free Mock Test →Preparing for Economics?
Practice full-length mock tests with real exam timers, instant score analysis, and all-India ranking.
Chapter Practice
Practice Banking & Financial Markets MCQs →Want more practice questions on Banking & Financial Markets?
Solve complete topic-wise tests with detailed solutions on GkGet.
Related Practice Questions
Recommended practice questions in Economics · Banking & Financial Markets