The Relationship That Exists Between Bond Maturity and Risk Can

question 21

Multiple Choice

The relationship that exists between bond maturity and risk can be explained through observing that:

• A)The longer the period,the greater the potential for a change in the ability of a company to repay its debt
• B)A broad-based change in interest rates will have a greater effect on long-term bonds
• C)The shorter the period,the greater the potential for a change in the ability of a company to repay its debt
• D)Both a and b
• E)Both b and c

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Definitions:

Mode

The value that appears most frequently in a given set of data.

Median

The middle value in a data set, which separates the higher half from the lower half.

Statistically Significant

A term indicating that the results of an analysis show a likely true effect rather than one due to random chance, based on a predetermined threshold of probability.

Statistical Average

A central or typical value calculated from a set of data, commonly referring to the mean, but can also refer to the median or mode.