A Bond That Had a 20-Year Original Maturity with 1

question 22

True/False

A bond that had a 20-year original maturity with 1 year left to maturity has more price risk than a 10-year original maturity bond with 1 year left to maturity.(Assume that the bonds have equal default risk and equal coupon rates,and they cannot be called. )

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Definitions:

Trading Securities

Financial assets such as stocks or bonds, held by a firm for the purpose of reselling them in the short term to profit from price movements.

Held Primarily

Indicates that the main reason for holding an asset or investment is for a specific purpose, not necessarily for immediate sale.

Amortized Book Value

The adjusted book value of an asset after accounting for amortization expenses.

Bond Investment

The act of investing in bonds, which are debt securities issued by entities to raise capital, offering fixed income over time.