There are three features that determine the magnitude of the bond price volatility:
- The lower the coupon, the greater the bond price volatility.
- The longer the term to maturity, the greater the price volatility.
- The lower the initial yield, the greater the price volatility.
In this case the only determinant that will cause a higher interest rate risk is having a low yield to maturity (initial yield). A higher coupon yield and a higher current yield will cause for lower interest rate risk.
