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.