Which of the Following Observations Is NOT True

question 60

Multiple Choice

Which of the following observations is NOT true?

• A)Variance of bond prices is nonconstant over time.
• B)Variance of bond prices rises at first and then falls as the bond approaches maturity.
• C)As the bond approaches maturity, all price paths must lead to 100 percent of the face value of the bond.
• D)As the bond approaches maturity, all price paths must lead to the principal paid by the issuer on maturity.
• E)Variance of a bond's price or return increases as maturity approaches.

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