Which of the Following Are Generally True of All Bonds

question 56

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.

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Definitions:

Conformity

The act of matching attitudes, beliefs, and behaviors to group norms or the influence of group pressure on individual actions.

Confederates

Individuals who appear to be participants in a study but are actually part of the research team, used to manipulate social interactions.

Self-Fulfilling Prophecy

A prediction that directly or indirectly causes itself to become true, due to positive feedback between belief and behavior.

Diffusion Of Responsibility

A sociopsychological phenomenon where individuals are less likely to take action or feel a sense of responsibility in the presence of a large group of people.