Which of the Following Statements Is CORRECT

question 1

Multiple Choice

Which of the following statements is CORRECT?

• A) You hold two bonds,a 10-year,zero coupon,issue and a 10-year bond that pays a 6% annual coupon.The same market rate,6%,applies to both bonds.If the market rate rises from its current level,the zero coupon bond will experience the larger percentage decline.
• B) The time to maturity does not affect the change in the value of a bond in response to a given change in interest rates.
• C) You hold two bonds.One is a 10-year,zero coupon,bond and the other is a 10-year bond that pays a 6% annual coupon.The same market rate,6%,applies to both bonds.If the market rate rises from the current level,the zero coupon bond will experience the smaller percentage decline.
• D) The shorter the time to maturity,the greater the change in the value of a bond in response to a given change in interest rates,other things held constant.
• E) The longer the time to maturity,the smaller the change in the value of a bond in response to a given change in interest rates.

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Definitions:

Meaningfulness

The quality of having significance, purpose, or value to an individual or community.

Terminal Illness

A disease or condition that is incurable and likely to lead to death within a relatively short time frame.

Natural Aging Process

The gradual changes in the biological, physical, and psychological dimensions of human beings over time, not influenced by disease or environmental factors.

Narcissists

Individuals characterized by a pervasive pattern of grandiosity, a constant need for admiration, and a lack of empathy for others.