Which of the Following Bonds Has the Greatest Interest Rate

question 78

Multiple Choice

Which of the following bonds has the greatest interest rate price risk?

• A) A 10-year, $1,000 face value, zero coupon bond.
• B) A 10-year, $1,000 face value, 10% coupon bond with annual interest payments.
• C) All 10-year bonds have the same price risk since they have the same maturity.
• D) A 10-year, $1,000 face value, 10% coupon bond with semiannual interest payments.

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Definitions:

Paradox of Voting

A situation where, despite the low probability that a single vote will affect the outcome of an election, individuals still choose to vote.

Majority Voting

A decision-making process where the option that receives more than half of the votes cast by eligible participants wins.

Median Voter

A theoretical concept suggesting that the outcome of a majority vote is likely to reflect the preferences of the median, or middle, voter when preferences are aligned along a single dimension.

Election Outcome

The result of a voting process in which a person or proposal is selected among a set of candidates or options.