Which of the Following Statements Is CORRECT

question 47

Multiple Choice

Which of the following statements is CORRECT?

• A) All else equal, long-term bonds have less interest rate price risk than short-term bonds.
• B) All else equal, low-coupon bonds have less interest rate price risk than high-coupon bonds.
• C) All else equal, short-term bonds have less reinvestment rate risk than long-term bonds.
• D) All else equal, long-term bonds have less reinvestment rate risk than short-term bonds.
• E) All else equal, high-coupon bonds have less reinvestment rate risk than low-coupon bonds.

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Definitions:

Semantic Differential

A scale used for measuring the meaning of things and concepts, involving pairs of opposite adjectives.

Likert Scale

A psychometric scale commonly used in questionnaires to obtain the preferences or degrees of agreement of respondents to a statement.

Dichotomous

Referring to a division or contrast between two completely opposite groups or things.

Independent Variable

In scientific experimentation, it is the variable that is manipulated or changed to test its effects on the dependent variable.