Which of the Following Is Not True About Bonds? in All

question 44

Multiple Choice

Which of the following is not true about bonds? In all of the statements,assume other things are held constant.

• A) Price sensitivity,that is,the change in price due to a given change in the required rate of return,increases as a bond's maturity increases.
• B) For a given bond of any maturity,a given percentage point increase in the interest rate (r_d)causes a larger dollar capital loss than the capital gain stemming from an identical decrease in the interest rate.
• C) For any given maturity,a given percentage point increase in the interest rate causes a smaller dollar capital loss than the capital gain stemming from an identical decrease in the interest rate.
• D) From a borrower's point of view,interest paid on bonds is tax-deductible.
• E) A 20-year zero-coupon bond has less reinvestment rate risk than a 20-year coupon bond.

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Definitions:

Impaired Swallowing

Difficulty in the passage of solids or liquids from the mouth to the stomach, often referred to as dysphagia.

Absent Bowel Sounds

An indication that there is reduced or no activity in the intestines, which could suggest a blockage or other gastrointestinal issues.

Patent Nares

Refers to nostrils that are open and unobstructed, allowing for easy airflow.

Gag Reflex

A reflex contraction of the back of the throat, evoked by touching the soft palate, designed to prevent choking.