Which of the Following Bonds Has the Greatest Price Risk

question 23

Multiple Choice

Which of the following bonds has the greatest price risk?

• A) A 10-year $100 annuity.
• B) A 10-year,$1,000 face value,zero coupon bond.
• C) A 10-year,$1,000 face value,10% coupon bond with annual interest payments.
• D) All 10-year bonds have the same price risk since they have the same maturity.
• E) A 10-year,$1,000 face value,10% coupon bond with semiannual interest payments.

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Definitions:

Empirical Support

Evidence that is based on observation or experience, rather than theory or pure logic.

Social Exchange Principles

Theoretical perspectives that view social interactions as transactions in which individuals seek to maximize rewards and minimize costs.

Communal Relationships

Bonds between individuals that are based on mutual care and concern rather than on individual gain.

Clark And Mills

describes theorists known for differentiating between communal and exchange relationships in social psychology.