Which of the Following Is Generally True of All Bonds

question 14

Multiple Choice

Which of the following is generally true of all bonds?

• A) The longer a bond's maturity, the greater is the rate of return that occurs as a result of the increase in the interest rate.
• B) Even though a bond has a substantial initial interest rate, its return can turn out to be negative if interest rates rise.
• C) Prices and returns for short-term bonds are more volatile than those for longer term bonds.
• D) A fall in interest rates results in capital losses for bonds whose terms to maturity are longer than the holding period.

Calculate total interest earned on bonds and investments over specific periods.

Understand the principles of time value of money in calculating equivalent payment streams and investment outcomes.

Apply mathematical formulas to compare investment returns and assess financial choices.

Perform calculations involving rate adjustments, such as inflation and discount rates, on financial planning.

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