When Bonds Sell Above Par, What Is the Relationship of Price

question 63

Multiple Choice

When bonds sell above par, what is the relationship of price sensitivity to rising interest rates?

• A) Price volatility increases at an increasing rate.
• B) Price volatility increases at a decreasing rate.
• C) Price volatility decreases at a decreasing rate.
• D) Price volatility decreases at an increasing rate.

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Definitions:

Income Statement

A financial statement that reports a company's financial performance over a specific accounting period, detailing revenues, expenses, and net income.

Incurred

Refers to a cost that has been realized or a liability that has been acquired during a specific period.

Statement of Cash Flows

An overview of a company's cash transactions, detailing money coming in from operational efforts and investment activities, and money going out to cover the costs associated with these activities during a specific period.

Reliable

The quality of being consistently accurate and dependable, often used to describe data, methods, or instruments that yield similar results across repeated trials.