Which One of the Following Bonds Is the Least Sensitive

question 52

Multiple Choice

Which one of the following bonds is the least sensitive to changes in market interest rates?

• A)Zero coupon, 10 year
• B)6 percent annual coupon, 10 year
• C)Zero coupon, 4 year
• D)8 percent annual coupon, 4 year
• E)6 percent annual coupon, 4 year

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Definitions:

Unemployment Tax

Taxes paid by employers to fund the unemployment insurance program, providing financial assistance to unemployed workers.

Federal Income Tax

A tax levied by the U.S. government on the annual earnings of individuals, corporations, trusts, and other legal entities.

Social Security Tax

A tax that funds the Social Security program, imposed on both employers and employees based on wages earned.

State Disability Insurance

A government insurance program that provides partial wage replacement to eligible workers who are unable to work due to a disability.