The Bonds That Are Most Sensitive to Interest Rate Movements

question 33

Multiple Choice

The bonds that are most sensitive to interest rate movements have

• A)no coupon and a short-term maturity.
• B)high coupons and a short-term maturity.
• C)high coupons and a long-term maturity.
• D)no coupon and a long-term maturity.

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Definitions:

Monitoring

Monitoring involves the continuous or regular observation and checking of activities or processes to ensure they are going as planned or meeting standards.

Moral Hazard

The situation in which one party is inclined to take risks because the negative consequences of the risk will be borne by another party.

Money-Back Guarantee

A money-back guarantee is a promise from a seller to refund a buyer's purchase price if the product sold does not satisfy the buyer's expectations.

Pairwise Voting

A voting system where candidates are compared in pairs, and the winner is determined by who wins the most individual comparisons.