Which of the Following Relationships Does NOT Hold in the Pricing

question 1

Multiple Choice

Which of the following relationships does NOT hold in the pricing of fixed-rate assets given changes in market rate?

• A)A decrease in interest rates generally leads to an increase in the value of assets.
• B)Longer maturity assets have greater changes in price than shorter maturity assets for given changes in interest rates.
• C)The absolute change in price per unit of maturity time for given changes in interest rates decreases over time, although the relative changes actually increase.
• D)For a given percentage decrease in interest rates, assets will increase in price more than they will decrease in price for the same, but opposite increase in rates.
• E)None of these.

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Definitions:

Trend Percentage

A form of financial analysis that shows the direction of change in financial statements items over multiple periods.

Financial Ratios

These are calculations that measure a company's financial performance by comparing two or more financial metrics from financial statements.

Ratios

Financial metrics that provide insights into the performance, financial health, and condition of a business by comparing two numeric values from its financial statements.

Financial Ratios

Quantitative measures derived from financial statements to evaluate a company's financial performance and health.