Which of the Following Bonds Has the Greatest Interest Rate

question 42

Multiple Choice

Which of the following bonds has the greatest interest rate price risk?

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

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Definitions:

Time Urgency

The feeling of being under constant pressure to act quickly or complete tasks in a limited timeframe, often associated with stress.

Competitive

Characterized by or involving competition; striving to gain or win something by defeating or establishing superiority over others.

Hardy Personality

A personality trait characterized by resilience and the capability to thrive in the face of stress and adversity, linked to positive coping mechanisms and attitudes.

Type A Personality

A temperament characterized by high levels of ambition, aggression, competitiveness, drive, impatience, need for control, focus on time management, and stress.