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:

Utility Functions

Representations of an individual's preference ordering over a set of goods or outcomes, quantifying the satisfaction obtained from each.

Private Goods Consumption

The act of consuming goods that are excludable and rivalrous in nature, implying that one individual's consumption of the good prevents others from consuming the same unit of the good.

Clarke Tax

A taxation mechanism designed to make individuals reveal their true valuation for a public good.

Polluters

Entities that release pollutants into the natural environment, causing pollution and environmental harm.