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:

Technological Innovations

New inventions and improvements in existing technologies or processes that significantly change how a product or service is produced or delivered.

Economic Shifts

Changes in the structure or performance of an economy, often influenced by policy, market trends, or external events.

Social Class

A division of a society based on social and economic status, influencing one's opportunities, lifestyle, and attitudes.

Leisure Interests

Activities or hobbies pursued for enjoyment, relaxation, or pleasure during free time.