Assuming All Else Is Constant,which of the Following Statements Is

question 27

Multiple Choice

Assuming all else is constant,which of the following statements is correct?

• A)A 20-year zero coupon bond has more reinvestment rate risk than a 20-year coupon bond.
• B)For any given maturity, a 1.0 percentage point decrease in the market interest rate would cause a smaller dollar capital gain than the capital loss stemming from a 1.0 percentage point increase in the interest rate.
• C)Price sensitivity as measured by the percentage change in price due to a given change in the required rate of return decreases as a bond's maturity increases.
• D)For a bond of any maturity, a 1.0 percentage point increase in the market interest rate (r_d) causes a larger dollar capital loss than the capital gain stemming from a 1.0 percentage point decrease in the interest rate.

---

Definitions:

Mild Sedative

A substance that induces sedation by reducing irritability or excitement at a minimal intensity.

Larger Dose

An increased amount or concentration of a substance or medication administered or taken at one time.

Insomnia

A sleep disorder characterized by difficulty falling asleep, staying asleep, or experiencing restorative sleep, leading to daytime impairment.

Impaired Attention

A reduced ability to focus on a task or concentrate for a normal period, which can negatively impact performance and productivity.