A Bond with Short Maturity Has Less "Interest Rate Risk

question 22

True/False

A bond with short maturity has less "interest rate risk" than a bond with long maturity when all other features-coupon interest rate, par value, and interest payment frequency-are the same.

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Definitions:

Genetic Information

The data encoded in an organism's DNA, including gene sequences and their variations, which dictates the inherited traits of the organism.

Cognitive Miser

A cognitive miser is a theory in social psychology suggesting that humans conserve cognitive energy by relying on heuristics or mental shortcuts to make decisions and judgments.

Motivated Tactician

A model of social cognition that characterises people as having multiple cognitive strategies available, which they choose among on the basis of personal goals, motives, and needs.

Role of Thought

The importance or function of cognitive processes in understanding and reacting to the environment.