Which of the Following Relationships Does NOT Hold in the Pricing

question 15

Multiple Choice

Which of the following relationships does NOT hold in the pricing of fixed-rate assets given changes in market rate?

• A)A decrease in interest rates generally leads to an increase in the value of assets.
• B)Longer maturity assets have greater changes in price than shorter maturity assets for given changes in interest rates.
• C)The absolute change in price per unit of maturity time for given changes in interest rates decreases over time, although the relative changes actually increase.
• D)For a given percentage decrease in interest rates, assets will increase in price more than they will decrease in price for the same, but opposite increase in rates.
• E)None of the options.

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Definitions:

Psychological Disorders

Conditions manifesting through psychological symptoms, affecting an individual's emotional state, cognition, and behavior.

Behaviourally Inhibited

A temperament characterized by a tendency to react with fear or withdrawal in new situations or when encountering unfamiliar people or environments.

Anxious Temperament

A predisposition to respond to situations with fear or anxiety, often resulting from genetic or environmental factors.

Anxiety Disorders

A group of mental health disorders characterized by significant feelings of anxiety and fear, impacting daily living.