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:

Lineage

A unilineal kin group descended from a common ancestor or founder who lived four to six generations ago and in which relationships among members can be exactly stated in genealogical terms.

Unilineal Kin Group

A social group where membership is inherited through either the male (patrilineal) or female (matrilineal) line exclusively.

Nuclear Families

A family group consisting of parents and their children, regarded as a basic social unit.

Unilineal Descent

Descent traced exclusively through either the male or the female line of ancestry to establish group membership.