Which One of the Following Statements Is Correct According to Malkiel's

question 13

Multiple Choice

Which one of the following statements is correct according to Malkiel's Theorems?

• A) For a given change in a bond's yield to maturity, the shorter the term to maturity, the greater will be the magnitude of the change in the bond's price.
• B) The price of an outstanding bond is unaffected by changes in market interest rates.
• C) The size of the change in a bond's price increases at a constant rate given even incremental increases in a bond's yield-to-maturity even as the term to maturity lengthens.
• D) For a given change in a bond's yield-to-maturity, the absolute magnitude of the resulting change in the bond's price is directly related to the bond's coupon rate.
• E) For a given absolute change in a bond's yield-to-maturity, a decrease in yield will cause a greater change in the bond's price than will an increase in yield.

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Definitions:

Four Freedoms

Freedom of speech, freedom of worship, freedom from want, and freedom from fear, as described by President Franklin D. Roosevelt during his January 6, 1941, State of the Union address.

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The 32nd President of the United States (1933-1945), known for leading the country during the Great Depression and World War II.

Cold War

A period of geopolitical tension between the Soviet Union and the United States and their respective allies, from the late 1940s to 1991, without direct military conflict.

Social Contract

A theory or model that originated during the Age of Enlightenment and commonly refers to the implicit agreement among the members of a society to cooperate for social benefits, such as sacrificing some individual freedom for state protection.