You Have an Investment Horizon of 6 Years

question 4

Multiple Choice

You have an investment horizon of 6 years. You choose to hold a bond with a duration of 10 years. Your realized rate of return will be larger than the promised yield on the bond if ________.

• A) interest rates increase
• B) interest rates stay the same
• C) interest rates fall
• D) The answer cannot be determined from the information given.

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