Assuming All Else Is Constant, Which of the Following Statements

question 38

Multiple Choice

Assuming all else is constant, which of the following statements is CORRECT?

• A) For any given maturity, a 1.0 percentage point decrease in the market interest rate would cause a smaller dollar capital gain than the capital loss stemming from a 1.0 percentage point increase in the interest rate.
• B) From a corporate borrower's point of view, interest paid on bonds is not tax-deductible.
• C) Price sensitivity as measured by the percentage change in price due to a given change in the required rate of return decreases as a bond's maturity increases.
• D) For a bond of any maturity, a 1.0 percentage point increase in the market interest rate (r_d) causes a larger dollar capital loss than the capital gain stemming from a 1.0 percentage point decrease in the interest rate.
• E) A 20-year zero coupon bond has more reinvestment rate risk than a 20-year coupon bond.

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Definitions:

Functional Work Teams

Teams organized around specific functions or tasks within an organization, such as sales, marketing, or product development, focused on achieving particular objectives.

Effective Leadership

Effective Leadership is the ability of a leader to inspire, influence, and guide individuals or groups towards achieving the organizational goals in an efficient and ethical manner.

Group Decision

The outcome of a decision-making process that involves the input, agreement, and collaboration of multiple individuals or stakeholders.

Less Responsibility

A reduction in the duties or tasks one is required to manage or oversee.