Which of the Following Statements Is CORRECT

question 94

Multiple Choice

Which of the following statements is CORRECT?

• A) All else equal, long-term bonds have less interest rate price risk than short-term bonds.
• B) All else equal, low-coupon bonds have less interest rate price risk than high-coupon bonds.
• C) All else equal, short-term bonds have less reinvestment rate risk than long-term bonds.
• D) All else equal, long-term bonds have less reinvestment rate risk than short-term bonds.
• E) All else equal, high-coupon bonds have less reinvestment rate risk than low-coupon bonds.

---

Definitions:

Sound

The property of a deductive argument that is valid and whose premises are true.

Invalid

Refers to an argument or reasoning where the conclusion does not logically follow from the premises.

Validity

The property of a deductive argument in which it is impossible for the premises to be true and the conclusion false.

Analogy

Identifying and discussing the traits of two subjects in relation to each other to offer explanation or insight.