Which One of the Following Is Correct Concerning Bond Prices

question 64

Multiple Choice

Which one of the following is correct concerning bond prices?

• A) All else equal, a 12% bond will sell at a higher price than a 10% bond.
• B) The price of a short-term bond is more sensitive to interest rate changes than the price of a Long-term bond.
• C) The price of a zero-coupon bond is less sensitive to interest rate changes than the price of a coupon bond.
• D) Bond prices tend to fluctuate more the less time to maturity.
• E) Movements in bond prices are directly related to movements in the market rate of interest.

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Definitions:

Rate Of Return

Earnings or losses experienced by an investment within a chosen period, measured as a percentage of the investment’s purchase cost.

Heirs

Individuals legally entitled to inherit a deceased person's assets.

Rate Of Return

Fluctuations in the value of an investment during a pre-defined period, calculated as a percentage of the investment’s commencement cost.

Start Saving

The practice of setting aside a portion of current income for future use, aimed at building financial security.