13.3
3. Why are the prices on long term bonds more volatile than those on short term bonds? (4 pts)
You can think of it as either that any change in interest rate is compounded or amplified in long term bonds or that you are stuck in the long-bond deal longer than for the short-bond. Either way, you could see that a change in interest rates should impact the long term bond’s price more than the short term bond’s price.