Assuming Other Things Are Held Constant, Which of the Following

question 86

Multiple Choice

Assuming other things are held constant, which of the following is correct?

• A)The change in the price of a bond due to a change in the interest rate is more significant in bonds with longer maturity periods.
• B)For a bond of any maturity, a given percentage point increase in the interest rate causes a larger dollar capital gain than the capital loss stemming from an identical decrease in the interest rate.
• C)For any given maturity, a percentage point decrease in the interest rate causes a smaller dollar capital loss than the capital gain stemming from an identical increase in the interest rate.
• D)In the year of purchase of bonds, an investor gets a deduction for the difference in the market value of bonds purchased at a premium and the face value of the bonds.
• E)A 20-year bond has more interest rate reinvestment risk than a two-year bond.

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Definitions:

Maximum Heart Rate

The highest number of heartbeats per minute during maximum physical exertion.

Rockport Walk Test

A fitness test designed to estimate an individual's aerobic capacity and cardiovascular fitness by measuring the time it takes to walk a mile as fast as possible.

Cardiorespiratory Endurance

The ability of the body's circulatory and respiratory systems to supply fuel and oxygen during sustained physical activity.

Metabolic Equivalents

A physiological measure expressing the energy cost of physical activities as multiples of the metabolic rate at rest.