An Investor Holds Two Bonds, One with 5 Years Until

question 6

Multiple Choice

An investor holds two bonds, one with 5 years until maturity and the other with 20 years until maturity.Which of the following is more likely if interest rates suddenly increase by 2%?

• A)the 5-year bond will decrease more in price.
• B)the 20-year bond will decrease more in price.
• C)both bonds will decrease in price similarly.
• D)neither bond will decrease in price, but their yields will increase.

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Heavy machinery equipment used for moving, digging, and clearing large pieces of land.

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An individual who creates and manages a business venture in order to generate profits, often taking on financial risks.

Profitable Opportunities

Situations or ventures that promise a return on investment or generate financial gain.

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