Which of the Following Bonds Has the Greatest Interest Rate

question 108

Multiple Choice

Which of the following bonds has the greatest interest rate price risk?

• A) a 10-year, $1,000 face value, zero coupon bond.
• B) a 10-year, $1,000 face value, 10% coupon bond with annual interest payments.
• C) all 10-year bonds have the same price risk since they have the same maturity.
• D) a 10-year, $1,000 face value, 10% coupon bond with semiannual interest payments.
• E) a 10-year $100 annuity.

---

Definitions:

Brooks

Refers to the work of psychologist Allan Brooks, known for contributions in cognitive psychology, especially in visual and spatial memory.

Exemplars

Specific instances or examples within a category that are used in cognitive psychology to theorize how people categorize items and ideas.

Prototype View

The prototype view is a theory in cognitive science suggesting that people categorize objects and ideas based on a mental image or "prototype" that represents the most typical example of a category.

Prototype

An abstract representation of an idealized member of a class of objects or events.