Which of the Following Statements About Bonds Is True

question 35

Multiple Choice

Which of the following statements about bonds is true?

• A) The market value of a bond moves in the opposite direction of market interest rates.
• B) As the maturity date of a bond approaches, the market value of a bond will become more volatile.
• C) Long-term bonds are less risky than short-term bonds.
• D) If market interest rates are higher than a bond's coupon interest rate, then the bond will sell above its par value.
• E) None of the above.

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Definitions:

Anticipated

Expected or predicted, often used in contexts where outcomes or events are seen as probable based on current information or trends.

Investment Tax Credit

a tax incentive that allows businesses to deduct a certain percentage of the amount invested in assets or projects from their tax liability.

Investment Goods

Long-term assets purchased for the purpose of generating income, growth, and/or value appreciation.

Interest Rate

The percentage charged on borrowed money, or earned through savings and investments, reflecting the cost of borrowing or the benefit of saving.