Which of the Following Bonds Would Be Likely to Exhibit

question 66

Multiple Choice

Which of the following bonds would be likely to exhibit a greater degree of interest-rate risk?

• A)A coupon-paying bond with 5 years until maturity
• B)A coupon-paying bond with 20 years until maturity
• C)A floating-rate bond with 20 years until maturity
• D)A zero-coupon bond with 30 years until maturity

---

Definitions:

Average Cost

The expense per unit, resulting from dividing the aggregate cost of production by the total units produced.

X-Inefficiency

X-Inefficiency occurs when a firm's output is not produced with the minimum possible resources due to factors like organizational slack, lack of competitive pressure, or managerial inefficiency.

Economies Of Scale

The cost advantages obtained due to the increased level of production, which causes the average cost per unit to fall.

Output Q₂

A specific quantity of goods produced during a given period, indicated as "Q₂" to signify a particular point or interval in production.