Which of the Following Statements Is CORRECT

question 9

Multiple Choice

Which of the following statements is CORRECT?

• A)You hold two bonds.One is a 10-year, zero coupon, issue and the other is a 10-year bond that pays a 6% annual coupon.The same market rate, 6%, applies to both bonds.If the market rate rises from the current level, the zero coupon bond will experience the larger percentage decline.
• B)The time to maturity does not affect the change in the value of a bond in response to a given change in interest rates.
• C)You hold two bonds.One is a 10-year, zero coupon, bond and the other is a 10-year bond that pays a 6% annual coupon.The same market rate, 6%, applies to both bonds.If the market rate rises from the current level, the zero coupon bond will experience the smaller percentage decline.
• D)The shorter the time to maturity, the greater the change in the value of a bond in response to a given change in interest rates.
• E)The longer the time to maturity, the smaller the change in the value of a bond in response to a given change in interest rates.

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Definitions:

Undesirable Tone

A manner of communication that may be perceived as inappropriate, negative, or counterproductive to the intended message.

Stiff

Often describes a lack of flexibility or easiness in movement, attitude, or in the context of writing, it can refer to a formal or overly formal tone.

Friendly

Exhibiting warmth, kindness, and approachability in interactions with others.

Hidden Negatives

Subtle or indirect negative comments or connotations in communication that are not immediately apparent.