Your Uncle Would Like to Restrict His Interest Rate Risk

question 58

Multiple Choice

Your uncle would like to restrict his interest rate risk and his default risk,but he still would like to invest in corporate bonds.Which of the possible bonds listed below best satisfies your uncle's criteria?

• A) AAA bond with 10 years to maturity.
• B) BBB perpetual bond.
• C) BBB bond with 10 years to maturity.
• D) AAA bond with 5 years to maturity.
• E) BBB bond with 5 years to maturity.

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