Maturity Risk Exists Because the Prices of Longer Term Bonds

question 145

True/False

Maturity risk exists because the prices of longer term bonds fluctuates more in response to interest rate changes than the prices of shorter term bonds.

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Definitions:

Produced

Refers to goods or services that have been created as a result of a manufacturing or production process.

Coase Theorem

An economic theory proposing that under conditions of no transaction costs, parties can negotiate and arrive at efficient resource allocation and solution to externalities regardless of initial property rights allocation.

Number Of People

A quantitative measure of the people involved or affected in a particular context.

Positive Externalities

Benefits that are enjoyed by a third-party or society as a result of an economic transaction.