Which of the Following Statements Is CORRECT

question 35

Multiple Choice

Which of the following statements is CORRECT?

• A) If their maturities and other characteristics were the same, a 5% coupon bond would have more interest rate price risk than a 10% coupon bond.
• B) A 10-year coupon bond would have more reinvestment rate risk than a 5-year coupon bond, but all 10-year coupon bonds have the same amount of reinvestment rate risk.
• C) A 10-year coupon bond would have more interest rate price risk than a 5-year coupon bond, but all 10-year coupon bonds have the same amount of interest rate price risk.
• D) If their maturities and other characteristics were the same, a 5% coupon bond would have less interest rate price risk than a 10% coupon bond.
• E) A zero coupon bond of any maturity will have more interest rate price risk than any coupon bond, even a perpetuity.

---

Definitions:

Atomic Saber Rattling

The display or threat of nuclear power as a means of coercion or to demonstrate military capability, often associated with Cold War era tensions.

Prisoners of War

Individuals captured by an adversary during armed conflict, held and sometimes treated according to rules established by international law.

Covert Military Operations

Covert military operations are secret actions undertaken by armed forces or intelligence agencies, aimed at achieving military or political objectives without revealing the sponsor's identity.

Dwight D. Eisenhower

The 34th President of the United States, a five-star general during World War II, and leader during the early years of the Cold War.