Which of the Below Statements Is TRUE

question 8

Multiple Choice

Which of the below statements is TRUE?

• A) The pure expectations theory pays attention to the risks inherent in investing in bonds and like instruments.
• B) In regards to the uncertainty about the return over some investment horizon, one risk involves the uncertainty about the price of the bond at the beginning of the investment horizon.
• C) An investor who plans to invest for five years would not consider the alternative of investing in a 30-year bond and selling it at the end of five years.
• D) The risk that the price of the bond will be lower than currently expected at the end of the investment horizon is called price risk.

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Definitions:

Top-Down Processing

A cognitive process that starts with the brain applying what it knows and expects to perceive and interpret new information.

The Fovea

A tiny pit located in the macula of the retina that provides the clearest vision of all; it's responsible for sharp central vision.

The Retina

A layer at the back of the eye that contains cells sensitive to light and triggers nerve impulses that pass via the optic nerve to the brain, where a visual image is formed.

Optic Nerve

The structure at the back of the eye, made up of axons of the ganglion cells, that carries visual information to the brain for further processing.