Assuming All Else Is Constant, Which of the Following Statements

question 66

Multiple Choice

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

• A) A 20-year zero coupon bond has more reinvestment rate risk than a 20-year coupon bond.
• B) 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.
• C) From a corporate borrower's point of view, interest paid on bonds Is not tax-deductible.
• D) 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.
• E) For a bond of any maturity, a 1.0 percentage point increase in the market interest rate (rd) causes a larger dollar capital loss than the capital gain stemming from a 1.0 percentage point decrease in The interest rate.

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