Why do low coupon bonds change more in price than high coupon bonds?

Answer 1

Discounting with low coupon rates give high price than dicscounting with high coupon rate. Low coupon bonds are short term maturity bonds and high coupon bonds are of long term maturity. Lot of action happen in the short term bond meaning the demand and supply of short term coupon changes on a day to day basis so their volatility or price change in short periods. When there is an expected recession in the near term then the action shifts to the long term maturity bonds and there is volatility in the long term market then. The coupoun rates of different types of bonds when plotted against maturity gives the 'yield curve' which has in normal times upward slope due to low coupon rates of the short term bonds. When the scenario shifts to action in the high coupon bonds then the yield curve inverts and the phenomenon is called yield curve inversion. It is at this time we can expect a Recession in the near future.

Answer 2

dont know what you mean maybe because they are closer to maturity. The high ones might take longer to get there so sell at a deeper discount. Are you talking Zero Coupon ... Well they sell them at a deep discount at Maturity you get the value. SO if by low they mean closer to zero or Maturity the price will be higher because the wait is over. Well I hope this helps