Which of the Following Are True About the Interest-Rate Sensitivity

question 4

Multiple Choice

Which of the following are true about the interest-rate sensitivity of bonds? I) Bond prices and yields are inversely related.
II) Prices of long-term bonds tend to be more sensitive to interest-rate changes than prices of short-term bonds.
III) Interest-rate risk is correlated with the bond's coupon rate.
IV) The sensitivity of a bond's price to a change in its yield to maturity is inversely related to the yield to maturity at which the bond is currently selling.

• A)I and II
• B)I and III
• C)I, II, and IV
• D)II, III, and IV

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