Which of the Following Statements About Bonds Is True

question 87

Multiple Choice

Which of the following statements about bonds is true?

• A) If market interest rates are below a bond's coupon interest rate, then the bond will sell above its par value.
• 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) As the maturity date of a bond approaches, the market value of a bond will become more volatile.

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Definitions:

Nonlinear Optimization Model

A type of optimization model where the objective function or any of the constraints are nonlinear functions.

Constant Times

Specific, unchanging durations that are relevant in certain procedural or computational contexts.

Forecast Statistic

The estimation of future values based on historical data and analysis methodologies.

Upper Bound

In mathematics, the upper limit of a set of values. It is the largest value that would not be exceeded by any element of the set.