One of the Basic Relationships in Interest Rate Theory Is

question 26

Multiple Choice

One of the basic relationships in interest rate theory is that,other things held constant,for a given change in the required rate of return,the ____ the time to maturity,the ____ the change in price.

• A) longer;smaller
• B) shorter;larger
• C) longer;greater
• D) shorter;smaller
• E) Answers c and d are both correct.

---

Definitions:

Enforceable

Pertains to a contract or obligation that is legally binding and can be upheld in a court of law.

Parol

Oral or verbal evidence, not recorded in writing, used to explain the terms of a contract.

Both Parties

Referring to the two entities or individuals involved in an agreement, contract, or negotiation.

Fraud in the Inducement

A deceitful practice where one party intentionally misrepresents material facts, inducing another to enter into a contract.