How Is the Risk Involved in Purchasing Bonds Affected by the Bond's

question 40

Multiple Choice

How is the risk involved in purchasing bonds affected by the bond's maturity date?

• A) The sooner the maturity date, the greater the rate of return is on the bond.
• B) The further the maturity date, the less likely a bondholders' claim will be filed.
• C) The sooner the maturity date, the lower the initial offering price of the bond.
• D) The further the maturity date, the greater the chance for unforeseen circumstances that effect the bond.
• E) The sooner the maturity date, the greater the chance for significant market changes that effect the bond.

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Definitions:

Forecast

A prediction or estimate of future events or trends, often based on analysis of past and current data.

Liabilities

Debts that a firm owes to others.