Bonds with Longer Maturities Are More Sensitive to Interest Rate

question 113

True/False

Bonds with longer maturities are more sensitive to interest rate movements than bonds that have shorter maturities.

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Definitions:

Inferior Good

A type of good for which demand decreases when the income of consumers increases, inversely related to income changes.

Indifference Curves

Curves that represent the locus of various points indicating combinations of goods giving equal satisfaction and utility to the consumer.

Inferior Good

A category of product that sees reduced demand as the income levels of buyers rise.

Normal Good

A normal good is one for which demand increases as the income of consumers increases.