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Why Are Long-Term Bonds More Sensitive to Changes in Interest

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Why are long-term bonds more sensitive to changes in interest rates than short-term bonds?


Definitions:

Times Interest Earned

A financial ratio that measures a company's ability to meet its debt obligations based on its current income.

Interest Expense

The cost incurred by an entity for borrowed funds.

Tax Rate

The percentage at which an individual or corporation is taxed.

Debt-to-Equity Ratio

A measure indicating how a company's assets are financed through a mix of debt and equity from shareholders.

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