Which of the Following Statements Is CORRECT

question 2

Multiple Choice

Which of the following statements is CORRECT?

• A) if their maturities and other characteristics were the same, a 5% coupon bond would have more interest rate price risk than a 10% coupon bond.
• B) a 10-year coupon bond would have more reinvestment rate risk than a 5-year coupon bond, but all 10-year coupon bonds have the same amount of reinvestment rate risk.
• C) a 10-year coupon bond would have more interest rate price risk than a 5-year coupon bond, but all 10-year coupon bonds have the same amount of interest rate price risk.
• D) if their maturities and other characteristics were the same, a 5% coupon bond would have less interest rate price risk than a 10% coupon bond.
• E) a zero coupon bond of any maturity will have more interest rate price risk than any coupon bond, even a perpetuity.

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Definitions:

Voting Power

The right or authority to cast a vote in order to influence a decision or outcome, often used in the context of elections or corporate governance.

Job Evaluation

The systematic process of determining the relative worth of jobs within an organization to establish fair compensation levels.

Relative Importance

A concept that assesses the significance of one factor or element in comparison to others within a given context or system.

Key Factors

Essential elements or criteria considered critical for the success of a project, business strategy, or performance evaluation.