Which of the Following Bonds Has the Greatest Interest Rate

question 151

Multiple Choice

Which of the following bonds has the greatest interest rate price risk?

• A)A 10-year, $1,000 face value, zero coupon bond.
• B)A 10-year, $1,000 face value, 10% coupon bond with annual interest payments.
• C)All 10-year bonds have the same price risk since they have the same maturity.
• D)A 10-year, $1,000 face value, 10% coupon bond with semiannual interest payments.
• E)A 10-year $100 annuity.

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Definitions:

Algonquians

A group of Native American peoples speaking Algonquian languages, originally inhabiting areas of North America from the Atlantic coast to the Great Lakes region.

Metacom

A Native American leader, also known as King Philip, who led a major rebellion against the colonists in New England in the 17th century.

Dominion of Virginia

Refers to the English colonial possession in North America that existed from 1607 (with the founding of Jamestown) until the American Revolution, known for its role in the development of American democracy and plantation economy.

James II

King of England, Scotland, and Ireland who reigned from 1685 to 1688, his policies of religious tolerance toward Catholics led to the Glorious Revolution, which resulted in his deposition and the establishment of constitutional monarchy in Britain.