Interest Rate Risk and the Time to Maturity Have a Relationship

question 186

Multiple Choice

Interest rate risk and the time to maturity have a relationship that is best characterized as ________.

• A) constant
• B) varying
• C) direct
• D) inverse

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Definitions:

Type II Error

The mistake made when a wrong null hypothesis is mistakenly accepted.

Beta (β)

A measure of the volatility, or systematic risk, of a security or portfolio in comparison to the market as a whole.

Null Hypothesis

A hypothesis that states there is no effect or no difference, serving as the default assumption in hypothesis testing until evidence suggests otherwise.

Alternative Hypothesis

A hypothesis that contradicts the null hypothesis and is usually what the researcher aims to prove.