Which of the Following Statements Is Correct

question 150

Multiple Choice

Which of the following statements is correct?

• A) Interest rates and bond prices vary directly.
• B) Interest rates and bond prices vary inversely.
• C) Interest rates and bond prices are unrelated.
• D) Interest rates and bond prices vary directly during inflations and inversely during recessions.

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Definitions:

Life Insurance Reserves

Financial reserves that life insurance companies must hold to ensure they can meet future policyholder obligations.

Mutual Fund Shares

Shares that represent an investor's ownership in a mutual fund and the income it generates.

Derivative Security

A security whose payoff depends on the value of other financial variables such as stock prices, interest rates, or exchange rates.

Related Security

A financial instrument that is linked to another in terms of price movement or interest rate changes, like options or futures tied to a specific stock.