To Achieve the Maximum Price Impact from an Estimated Interest

question 12

Multiple Choice

To achieve the maximum price impact from an estimated interest rate decrease, a bond buyer should purchase bonds with relatively:

• A) high coupon rates and long maturities.
• B) high coupon rates and short maturities.
• C) low coupon rates and long maturities.
• D) low coupon rates and short maturities.

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Definitions:

Refusal

The act of declining or rejecting an offer, request, or command.

Liability

The state of being legally responsible for something, typically a debt or obligation.

Negotiable Instrument

A legal document guaranteeing the payment of a specific amount of money, either on demand, or at a set time, with the payer named on the document.

Signed

Having affixed one's signature to a document, thereby indicating agreement, consent, or authorization.