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:

Biological Drive

An innate impulse in living organisms that directs behavior towards basic survival and reproductive needs.

Hunger

The physical sensation of needing or wanting food.

Naturally

Occurring in nature; not made or caused by humans.

Intimacy

The feeling of being close and emotionally connected to someone, involving a sense of shared understanding and trust.