Which of the Following Statements About Bonds Is True

question 62

Multiple Choice

Which of the following statements about bonds is true?

• A)As the maturity date of a bond approaches,the market value of a bond will become more volatile.
• B)Long-term bonds have less interest rate risk than do short-term bonds.
• C)Bond prices move in the same direction as market interest rates.
• D)If market interest rates are above a bond's coupon interest rate,then the bond will sell below its par value.
• E)None of the above.

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Definitions:

Pollution Rights

Permits or allowances that authorize the holder to emit a certain amount of pollution, often tradeable in a market to encourage reduction of pollution in cost-effective ways.

Taxes

Compulsory financial charges or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund government spending and various public expenditures.

Subsidies

Financial assistance provided by governments to individuals, businesses, or other entities, aimed at promoting economic activities that are deemed beneficial for the public interest.