# Which bond corresponds to which curve?

• Bond X has a coupon

• Bond Y is a zero-coupon bond (Maturity 2 years)

• Bond Z is a zero-coupon bond (Maturity 10 years)

The following graph is given:

X-axis: yield curve, Y-axis: price

Question: Which bond corresponds to which curve?

What is the way to solve a question like this? A little help is appreciated.

• This looks like a homework to me. – SmallChess Apr 9 '15 at 23:46
• Ask yourself: if everything is the same, do you prefer a zero-coupon bond with 2 years or 10 years? The bond that you prefer will also be more expensive because everybody wants it too. What's the relationship with the yields? – SmallChess Apr 9 '15 at 23:50
• The holder of a zero-coupon bond receives only at the end date a payment. A 2 years would be more preferable. – clubkli Apr 10 '15 at 0:15
• What has that to do with the yields? Once you know it, read again the shape of yield-curve for a zero-coupon-bond in a text book, you should know the answer. – SmallChess Apr 10 '15 at 0:17
• Bond prices and interest rates move in opposite direction. For a high value of the yield, the 2 year bond would be more expensive than the 10 year bond. – clubkli Apr 10 '15 at 0:34