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.

---

Definitions:

Marginal Cost

The expenditure incurred from creating one more unit of a product or service.

Total Variable Cost

The total of expenses that vary directly with the level of production or output.

Marginal Cost

The increment in expense for generating an additional unit of a product or service.

Swords

Edged weapons, longer than a knife or dagger, used historically in warfare or personal combat for cutting or thrusting.