"Greater price appreciation for low coupon issues when rates decline"

“Greater price appreciation for low coupon issues when rates decline compared with high coupon issues” Why, ? Q19 in cfa text Reading 29 i was thinking due to less impact from lower re-investment rates but I dont think this is it because that assumption assumes there is a larger impact from lower reinvestment rates regardless of how much larger the higher coupon issue is? My original thinking was that price would increase for higher coupon issues when rates decline since people would rush towards the higher coupon securities and increase their demand ?

Lower couplon issues have a longer duration and a greater sensitivity to interest rate changes.

moto376 is absolutely correct, but you’re trying to use reason to get to the answer. In your logic, your forgetting that, all else being equal, YTM will be the same between the two bonds. Since lower coupon bonds (I like to picture zeros) have lower reinvestment risk, they have a higher duration and demand would increase when rates decline more than demand for the higher coupon bonds. Like I said, I like to think of zeros…picture a zero-coupon bond selling at a relatively high discount to par before rates decline if that helps.