The correct answer will be option B. Reason with lower coupon rate the risk of interest rate is higher because low coupon bonds are more volatile and since coupon are very small therefore there is no risk of reinvestment. That’s why answer will be option B.
The answer would be B. the reason for the same is that lower coupon bonds are more volatile and since the coupons are lower therefore if the interest rate falls we have to invest at that fallen interest rate but the amount is small so small reinvestment risk.
The correct answer will be option B. Reason with lower coupon rate the risk of interest rate is higher because low coupon bonds are more volatile and since coupon are very small therefore there is no risk of reinvestment. That’s why answer will be option B.
The answer would be B. the reason for the same is that lower coupon bonds are more volatile and since the coupons are lower therefore if the interest rate falls we have to invest at that fallen interest rate but the amount is small so small reinvestment risk.