Which of the Following Are Generally TRUE of All Bonds

question 52

Multiple Choice

Which of the following are generally TRUE of all bonds?

• A)The longer a bond's maturity,the greater is the rate of return that occurs as a result of the increase in the interest rate.
• B)Even though a bond has a substantial initial interest rate,its return can turn out to be negative if interest rates rise.
• C)Prices and returns for short-term bonds are more volatile than those for longer term bonds.
• D)A fall in interest rates results in capital losses for bonds whose terms to maturity are longer than the holding period.

---

Definitions:

Idle

The state of an asset or resource not being in use, contributing no output or value during a certain period.

Fixed Assets

Long-term tangible assets that are used in the operation of a business and are not expected to be converted to cash in the short term, such as land, buildings, and machinery.

Book Value

Book Value represents the value of a company or an asset as it appears on the balance sheet, calculated by subtracting liabilities from assets.

Final Cash Flow

The last cash flow in a series of transactions or in the timeline of an investment, project, or finance-related activity.