Which Statement Regarding Bond Prices Is False

question 43

Multiple Choice

Which statement regarding bond prices is false?

• A)If interest rates rise,bond prices will fall.
• B)All bond prices respond to changes in interest rates in the opposite direction,but they do not all respond to the same extent.
• C)Bond prices and interest rates are negatively correlated.
• D)If bond prices rise,interest rates will fall.

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Definitions:

Weighted Average

A calculation that takes into account the varying degrees of importance of the numbers in a data set.

Component Cost

The expense associated with acquiring or manufacturing each individual part of a product or service.

Flotation Cost

The total costs associated with issuing new securities, including underwriting fees and other expenses.

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock, typically with dividends that are paid out before those of common stocks.