The Bonds That Are Most Sensitive to Interest Rate Movements

question 33

Multiple Choice

The bonds that are most sensitive to interest rate movements have

• A)no coupon and a short-term maturity.
• B)high coupons and a short-term maturity.
• C)high coupons and a long-term maturity.
• D)no coupon and a long-term maturity.

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Definitions:

State Charters

Legal authorization provided by a state to create an organization, such as the formation of banks or corporations under state law.

Federal Reserve System

The central banking system of the United States, responsible for setting monetary policy, including regulating interest rates and managing the country's money supply.

Nationally Chartered Banks

Financial institutions that operate under a charter granted by the federal government, allowing them to provide banking services across the nation.

Money Supply

The total amount of monetary assets available in an economy at a specific time, including cash, coins, and balances held in checking and savings accounts, which can affect inflation and economic growth.