Which of the Following Statements Is CORRECT

question 35

Multiple Choice

Which of the following statements is CORRECT?

• A) If their maturities and other characteristics were the same, a 5% coupon bond would have more interest rate price risk than a 10% coupon bond.
• B) A 10-year coupon bond would have more reinvestment rate risk than a 5-year coupon bond, but all 10-year coupon bonds have the same amount of reinvestment rate risk.
• C) A 10-year coupon bond would have more interest rate price risk than a 5-year coupon bond, but all 10-year coupon bonds have the same amount of interest rate price risk.
• D) If their maturities and other characteristics were the same, a 5% coupon bond would have less interest rate price risk than a 10% coupon bond.
• E) A zero coupon bond of any maturity will have more interest rate price risk than any coupon bond, even a perpetuity.

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Definitions:

Corporate Securities

Financial instruments such as stocks and bonds issued by corporations to raise capital.

Professional Corporation

A type of corporate entity for which many states offer incorporation options, designed for professions where the practitioners require a license, like doctors or lawyers.

Law Firm

A business entity formed by one or more lawyers to engage in the practice of law, providing legal services to clients.

Privately Owned

Properties or businesses that are owned by individuals or corporations rather than by the government or public.