Which of the Following Statements Is CORRECT

question 51

Multiple Choice

Which of the following statements is CORRECT?

• A) All else equal, high-coupon bonds have less reinvestment rate risk than low-coupon bonds.
• B) All else equal, long-term bonds have less interest rate price risk than short-term bonds.
• C) All else equal, low-coupon bonds have less interest rate price risk than high-coupon bonds.
• D) All else equal, short-term bonds have less reinvestment rate risk than long-term bonds.
• E) All else equal, long-term bonds have less reinvestment rate risk than short-term bonds.

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Definitions:

Accounting Equation

The foundational principle of accounting, stating that assets equal liabilities plus equity.

Source Documents

Original records that contain the details of a business transaction, such as invoices, receipts, and contracts.

Ledger Accounts

Accounts recorded in a ledger, representing a record of the financial transactions by type, whether it's assets, liabilities, equity, income, or expenses.

Cash Distribution

The payment of earnings or capital to shareholders, partners, or owners in the form of cash.