Which of the Following Statements Is CORRECT

question 17

Multiple Choice

Which of the following statements is CORRECT?

• A) One advantage of a zero coupon Treasury bond is that no one who owns the bond has to pay any taxes on it until it matures or is sold.
• B) Long-term bonds have less price risk but more reinvestment risk than short-term bonds.
• C) If interest rates increase,all bond prices will increase,but the increase will be greater for bonds that have less price risk.
• D) Relative to a coupon-bearing bond with the same maturity,a zero coupon bond has more price risk but less reinvestment risk.
• E) Long-term bonds have less price risk and also less reinvestment risk than short-term bonds.

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Definitions:

Trainees

Individuals who are undergoing training in a particular skill or profession.

Cowardly

Showing a lack of courage or bravery; easily scared to face danger, pain, or adversity.

Panic

An intense, sudden feeling of fear or anxiety that can cause physical symptoms and irrational behavior.

Stress

A factor that can be physical, mental, or emotional, leading to stress in the body or mind and potentially contributing to the onset of illnesses.