Assuming All Else Is Constant, Which of the Following Statements

question 38

Multiple Choice

Assuming all else is constant, which of the following statements is CORRECT?

• A) For any given maturity, a 1.0 percentage point decrease in the market interest rate would cause a smaller dollar capital gain than the capital loss stemming from a 1.0 percentage point increase in the interest rate.
• B) From a corporate borrower's point of view, interest paid on bonds is not tax-deductible.
• C) Price sensitivity as measured by the percentage change in price due to a given change in the required rate of return decreases as a bond's maturity increases.
• D) For a bond of any maturity, a 1.0 percentage point increase in the market interest rate (r_d) causes a larger dollar capital loss than the capital gain stemming from a 1.0 percentage point decrease in the interest rate.
• E) A 20-year zero coupon bond has more reinvestment rate risk than a 20-year coupon bond.

---

Definitions:

Biopower

A term by Foucault referring to the practice of modern states to regulate their subjects through "an explosion of numerous and diverse techniques for achieving the subjugations of bodies and the control of populations."

Normalization

The process by which norms come to be accepted and internalized by society members.

Self-fulfilling Prophecy

A belief or expectation that directly or indirectly causes itself to become true, due to positive feedback between belief and behavior.

Passive Euthanasia

The withholding or withdrawal of life-sustaining treatments, allowing a person to die naturally, rather than artificially prolonging life.