Which of the Following Statements Is CORRECT

question 22

Multiple Choice

Which of the following statements is CORRECT?

• A) The time to maturity does not affect the change in the value of a bond in response to a given change in interest rates.
• B) You hold two bonds.One is a 10-year, zero coupon, bond and the other is a 10-year bond that pays a 6% annual coupon.The same market rate, 6%, applies to both bonds.If the market rate rises from the current level, the zero coupon bond will experience the smaller percentage decline.
• C) The shorter the time to maturity, the greater the change in the value of a bond in response to a given change in interest rates.
• D) The longer the time to maturity, the smaller the change in the value of a bond in response to a given change in interest rates.
• E) You hold two bonds.One is a 10-year, zero coupon, issue and the other is a 10-year bond that pays a 6% annual coupon.The same market rate, 6%, applies to both bonds.If the market rate rises from the current level, the zero coupon bond will experience the larger percentage decline.

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Definitions:

Average Age

The mean age of a population, calculated by dividing the sum of all individual ages by the number of individuals.

Control Theory

A theory in sociology and criminology that explains individual compliance with social norms and laws through the presence of strong bonds with society that encourage self-control.

Deviant Behaviour

Actions or behaviors that violate societal norms or expectations, often drawing social condemnation or corrective measures.

Cultural Goals

Societal norms and values that dictate the aspirations and desirable achievements for its members, influencing behavior and social structure.