Holding Other Factors Constant, the Interest-Rate Risk of a Coupon

question 34

Multiple Choice

Holding other factors constant, the interest-rate risk of a coupon bond is lower when the bond's

• A)term to maturity is higher.
• B)coupon rate is lower.
• C)yield to maturity is higher.
• D)term to maturity is higher and coupon rate is lower.

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Definitions:

Straight-Line Depreciation

A method for divvying the expense of a tangible asset through its operational duration in equivalent annual amounts.

Incremental Sales

The additional sales generated by a particular business activity or decision.

Operating Expenses

Expenses that are incurred during the normal operation of a business, excluding the cost of goods sold.

Capital Budgeting

The approach of orchestrating and administering a business's enduring investments towards major initiatives or assets.