The Shorter the Maturity of a Fixed-Rate Debt Instrument, the Greater

question 131

True/False

The shorter the maturity of a fixed-rate debt instrument, the greater the reduction in its value to a given interest rate increase.

---

Definitions:

Borrowing Rate

The interest rate that a lender charges a borrower for the loan of funds, varying based on credit risk, loan amount, and duration.

Net 60

A payment term indicating that payment is due 60 days after the invoice date.

Lock Box System

A banking service provided to companies for speeding up collection of payments by having those payments sent directly to a bank's PO box, rather than to the company.

Clearing Time

The period between the initiation of a transaction and its settlement, during which the transaction is processed and validated.