Which One of the Following Statements Is Correct Concerning Interest

question 205

Multiple Choice

Which one of the following statements is correct concerning interest rate risk as it relates to bonds, all else equal?

• A) The shorter the time to maturity, the greater the interest rate risk.
• B) The higher the coupon rate, the greater the interest rate risk.
• C) For a bond selling at par value, there is no interest rate risk.
• D) The greater the number of semi-annual interest payments, the greater the interest rate risk.
• E) The lower the amount of each interest payment, the lower the interest rate risk.

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