There Is a Natural Tendency for the Yield on Long-Term

question 42

Multiple Choice

There is a natural tendency for the yield on long-term bonds to be greater than on short-term bonds because:

• A)holders of long-term bonds benefit most from a fall in interest rates.
• B)reinvestment risk is more pronounced for long-term bonds than short-term bonds.
• C)long-term bonds are more price-sensitive than short-term bonds.
• D)the risk of default is greater for long-term bonds.

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Definitions:

Interval Level Variables

Interval level variables are a type of quantitative data where the intervals between values are meaningful, but the data lack a true zero point, allowing for the measurement of difference but not ratio.

Ratio Level Variables

Variables that have a true zero point and can be compared in terms of multiples.

Categorical

Pertaining to data or variables that represent categories, qualities, or characteristics without inherent numerical value.

Nominal

Refers to data that can be categorized into named groups that do not imply any rank or order among them.