Which of the Following Statements About the Relationship Between Interest

question 48

Multiple Choice

Which of the following statements about the relationship between interest rates and bond prices is true?
I. There is an inverse relationship between bond prices and interest rates. II) There is a direct relationship between bond prices and interest rates.
III. The price of short-term bonds fluctuates more than the price of long-term bonds for a given change in interest rates. (Assuming that coupon rate is the same for both)
IV. The price of long-term bonds fluctuates more than the price of short-term bonds for a given change in interest rates. (Assuming that the coupon rate is the same for both)

• A) I and IV only
• B) I and III only
• C) II and III only
• D) None of the given statements are true

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Definitions:

Contingency Theory

Contingency theory asserts that the effectiveness of leadership or decision-making processes depends on the context or environment in which they occur, suggesting there is no one best way to manage or lead.

Empowerment Theory

A psychological approach that focuses on enabling individuals to gain control, authority, and influence over their own lives and the decisions that affect them.

Influence Events

Events or occurrences that have the power to impact decisions, behaviors, or the outcome of a situation significantly.

Prescriptive Contingency

A management approach that suggests specific actions to be taken in certain situations, based on the contingent nature of the environment.