Which of the Following Statements Is CORRECT

question 35

Multiple Choice

Which of the following statements is CORRECT?

• A) If their maturities and other characteristics were the same, a 5% coupon bond would have more interest rate price risk than a 10% coupon bond.
• B) A 10-year coupon bond would have more reinvestment rate risk than a 5-year coupon bond, but all 10-year coupon bonds have the same amount of reinvestment rate risk.
• C) A 10-year coupon bond would have more interest rate price risk than a 5-year coupon bond, but all 10-year coupon bonds have the same amount of interest rate price risk.
• D) If their maturities and other characteristics were the same, a 5% coupon bond would have less interest rate price risk than a 10% coupon bond.
• E) A zero coupon bond of any maturity will have more interest rate price risk than any coupon bond, even a perpetuity.

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Definitions:

Joint Venture

A business arrangement where two or more parties agree to pool their resources for the purpose of accomplishing a specific task or business activity.

Repatriation

The process of returning a person to their country of origin or citizenship, often used in the context of employees returning home after international assignments.

Foreign Assignments

Work tasks or roles allocated to employees in a location outside of their home country, typically as part of international business operations.

Parent Company

A corporation that owns enough voting stock in another firm to control its management and operations by influencing or electing its board of directors.