Which Statement Regarding Interest Rate Risk Is True

question 16

Multiple Choice

Which statement regarding interest rate risk is true?

• A)One advantage of a zero coupon Treasury bond is that no one who owns the bond has to pay any taxes on it until it matures or is sold.
• B)Long-term bonds have less interest rate price risk but more reinvestment rate risk than short-term bonds.
• C)If interest rates increase, all bond prices will increase, but the increase will be greater for bonds that have less interest rate risk.
• D)Relative to a coupon-bearing bond with the same maturity, a zero coupon bond has more interest rate price risk but less reinvestment rate risk.

---

Definitions:

Brain Imaging Technologies

Tools and methods used to visualize and study the structure and function of the brain.

Radiation Risk

The potential harmful effects on human health and the environment from exposure to ionizing radiation, which can lead to acute or chronic health issues depending on the dose and duration of exposure.

Nerve Cell

Also known as a neuron, it is the basic building block of the nervous system, responsible for transmitting information throughout the body.

Information Processing

A cognitive approach that likens the mind to a computer, emphasizing how information is taken in, used, stored, and retrieved.