Which of the Following Statements Is Correct

question 60

Multiple Choice

Which of the following statements is correct?

• A) Short-term debt instruments are more volatile in price than long-term instruments.
• B) Coupon rates are generally fixed when the bond is issued.
• C) Bond prices and market interest rates move together.
• D) The higher the coupon of a bond, the lower its price.

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Definitions:

Producer Surplus

The difference between what producers are willing to sell a product for and the price they actually receive.

Equilibrium Price

The selling price where the quantity of goods on offer is equal to the quantity consumers want to buy.

Consumer Surplus

The variance between the sum consumers are willing to shell out for a good or service and the sum they actually shell out.

Equilibrium Price

The price at which the quantity of a good or service demanded equals the quantity supplied, leading to a balance in the market.