Which of the Following Statements Is CORRECT

question 17

Multiple Choice

Which of the following statements is CORRECT?

• A) One advantage of a zero coupon Treasury bond is that no one who owns the bond has to pay any taxes on it until it matures or is sold.
• B) Long-term bonds have less price risk but more reinvestment risk than short-term bonds.
• C) If interest rates increase,all bond prices will increase,but the increase will be greater for bonds that have less price risk.
• D) Relative to a coupon-bearing bond with the same maturity,a zero coupon bond has more price risk but less reinvestment risk.
• E) Long-term bonds have less price risk and also less reinvestment risk than short-term bonds.

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Definitions:

Managerial Levers

Tools or methods used by managers to influence the performance and direction of their organization.

Large Lots

Refers to the practice of bulk buying or producing goods in significant quantities to achieve economies of scale.

Fixed Cost

Expenses that do not change with the level of goods or services produced over the short term.

Monthly Demand

The total amount of a product or service that consumers want to purchase over the course of a single month.