Which of the Following Bonds Is Most Susceptible to Interest

question 49

Multiple Choice

Which of the following bonds is most susceptible to interest rate risk from an investor's perspective?

• A)short-term, high-coupon
• B)short-term, low-coupon
• C)long-term, high-coupon
• D)long-term, zero-coupon

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Definitions:

Raul's Basis

This term is not a standard-tax related term or widely recognized financial concept. Likely refers to the basis of an investment or asset specific to an individual named Raul, which generally means the cost of the asset for tax purposes.

Capital Asset

Property owned for investment or personal use, excluding inventory or assets sold as part of a business's regular operations.

Guaranteed Payment

Payments made to partners in a partnership regardless of the partnership's income, often for services rendered or for the use of capital.

Separately Stated Item

Items on a partnership or S corporation tax return that are listed separately to ensure proper tax treatment at the individual level.