Which Statement Regarding Bonds Is True

question 63

Multiple Choice

Which statement regarding bonds is true?

• A)10-year, zero coupon bonds have higher reinvestment rate risk than 10-year, 10% coupon bonds.
• B)A 10-year, 10% coupon bond has less reinvestment rate risk than a 10-year, 5% coupon bond (assuming all else is equal).
• C)The total return on a bond during a given year is the sum of the coupon interest payments received during the year and the change in the value of the bond from the beginning to the end of the year.
• D)The price of a 20-year, 10% bond is less sensitive to changes in interest rates than the price of a 5-year, 10% bond.

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Definitions:

Cross-cultural Study

A research methodology that compares cultural factors across different societies to understand their influence on human behavior and attitudes.

Longitudinal Study

A study framework that repeatedly examines the same variables (for example, individuals) across short or extended time frames.

Triple-blind Study

A study design in which the participants, the people administering the treatments, and the researchers analyzing the results are unaware of who is receiving the treatment and who is receiving the placebo.

Population Study

Research conducted on a large group of individuals aimed at understanding the prevalence, incidence, or experience of a particular condition or characteristic within that population.