If You Expected Interest Rates to Fall, You Would Prefer

question 24

Multiple Choice

If you expected interest rates to fall, you would prefer to own bonds with

• A) short maturities and low coupons.
• B) long maturities and high coupons.
• C) long maturities and low coupons.
• D) short maturities and high coupons.
• E) None of these are correct.

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Definitions:

Root Nodules

Swollen lumps on roots of certain leguminous plants containing symbiotic nitrogen-fixing bacteria, crucial for converting atmospheric nitrogen into a form plants can use.

Bioaccumulation

Bioaccumulation is the process by which certain toxic substances (such as heavy metals or DDT) accumulate in an organism, often reaching harmful levels.

Biological Magnification

The method through which the levels of harmful compounds accumulate progressively in each subsequent level of the food chain.

Persistence

A characteristic of certain chemicals that are extremely stable and may take many years to be broken down into simpler forms by natural processes.