Which of the Following Statements Is CORRECT

question 12

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 interest rate price risk but more reinvestment rate 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 interest rate risk.
• D) Relative to a coupon-bearing bond with the same maturity, a zero coupon bond has more interest rate price risk but less reinvestment rate risk.
• E) Long-term bonds have less interest rate price risk and also less reinvestment rate risk than short-term bonds.

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Definitions:

James L. Adams

An author known for his work on creativity, particularly in the context of design and engineering.

Creativity

The use of imagination or original ideas to create something; inventiveness.

Uncertain Conditions

Situations where the outcomes or future states are not predictable due to a lack of information or inherent variability in the environment.

Entrepreneurship

The act of creating, developing, and managing a business venture along with its financial risks in order to profit and innovate within the market.