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

question 63

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

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Definitions:

Liability

The financial liabilities or obligations a company is legally bound to settle, which emerge in the process of conducting its business activities.

Owner's Equity

The amount of ownership an individual or entity has in a company, represented by the assets minus liabilities and often seen as the owner's claim against the company's assets.

Total Liabilities

The combined amount of debts and obligations that a company owes to outside parties at any given time.

Total Assets

The sum of all assets owned by a business, including both current and long-term assets, which represents the total resources available to the company.