Holding Other Factors Constant, the Interest-Rate Risk of a Coupon

question 82

Multiple Choice

Holding other factors constant, the interest-rate risk of a coupon bond is lower when the bond's

• A)term to maturity is lower.
• B)coupon rate is higher.
• C)yield to maturity is lower.
• D)term to maturity is lower and coupon rate is higher.
• E)All of the options

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Definitions:

Theories

Systematically organized principles or explanations that provide understanding, prediction, and control of phenomena.

Reductionism

The approach of analyzing and describing a complex phenomenon in terms of its simplest or most fundamental constituents.

Association

A mental connection or relation between thoughts, ideas, or concepts, often formed through experience or learning.

Innate Ideas

Concepts and knowledge that are argued to be inborn or naturally present in the mind, rather than acquired through experience.