The Tendency of the Variance of a Bond's Price to Decrease

question 86

Multiple Choice

The tendency of the variance of a bond's price to decrease as maturity approaches is called

• A)open interest.
• B)pull-to-par.
• C)digital default option.
• D)futures option.
• E)credit spread call option.

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Definitions:

Inelastic

Describes a situation where the demand or supply for a good or service is relatively unaffected by changes in price.

Price Elasticity of Demand

A measure of how responsive the quantity demanded of a good is to a change in its price, often used to gauge the relative change in demand as a result of price fluctuations.

Soccer Balls

Spherical balls designed and used specifically for the sport of soccer.

Quantity Demanded

The aggregate quantity of a product or service that buyers are ready and capable of buying at a specific price point.