Assuming All Else Is Constant, Which of the Following Statements

question 38

Multiple Choice

Assuming all else is constant, which of the following statements is CORRECT?

• A) For any given maturity, a 1.0 percentage point decrease in the market interest rate would cause a smaller dollar capital gain than the capital loss stemming from a 1.0 percentage point increase in the interest rate.
• B) From a corporate borrower's point of view, interest paid on bonds is not tax-deductible.
• C) Price sensitivity as measured by the percentage change in price due to a given change in the required rate of return decreases as a bond's maturity increases.
• D) For a bond of any maturity, a 1.0 percentage point increase in the market interest rate (r_d) causes a larger dollar capital loss than the capital gain stemming from a 1.0 percentage point decrease in the interest rate.
• E) A 20-year zero coupon bond has more reinvestment rate risk than a 20-year coupon bond.

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Definitions:

Kirkpatrick's Hierarchical Model

A model used to assess training initiatives, which is divided into four stages: Reaction, Learning, Behavior, and Results.

Barriers

Obstacles that impede progress or achievement.

Evaluation

The systematic process of collecting, analyzing, and using information to assess the effectiveness and impact of projects, programs, or policies.

Internal Referencing Strategy

A method in decision-making that relies on an individual's personal standards or experiences, rather than external sources.