Which of the Following Are Generally True of All Bonds

question 56

Multiple Choice

Which of the following are generally true of all bonds?

• A) The longer a bond's maturity, the greater is the rate of return that occurs as a result of the increase in the interest rate.
• B) Even though a bond has a substantial initial interest rate, its return can turn out to be negative if interest rates rise.
• C) Prices and returns for short-term bonds are more volatile than those for longer term bonds.
• D) A fall in interest rates results in capital losses for bonds whose terms to maturity are longer than the holding period.

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