Which of the Following Is Not True About Bonds? in All

question 39

Multiple Choice

Which of the following is not true about bonds? In all of the statements, assume other things are held constant?

• A) Price sensitivity, that is, the change in price due to a given change in the required rate of return, increases as a bond's maturity increases.
• B) For a given bond of any maturity, a given percentage point increase in the interest rate (rd) causes a larger rand capital loss than the capital gain stemming from an identical decrease in the interest rate.
• C) For any given maturity, a given percentage point increase in the interest rate causes a smaller rand capital loss than the capital gain stemming from an identical decrease in the interest rate.
• D) From a borrower's point of view, interest paid on bonds is tax-deductible.
• E) A 20-year zero-coupon bond has less reinvestment rate risk than a 20-year coupon bond.

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Definitions:

Ethical Leadership

A leadership approach that is guided by respect for ethical beliefs and values, and for the dignity and rights of others, promoting honesty, integrity, and fairness.

Servant Leadership

A leadership philosophy which emphasizes the leader's primary role as serving the needs of others, promoting the well-being of their followers, and helping them to develop and perform as highly as possible.

Enron

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WorldCom

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