Which of the Following Statements Is CORRECT

question 47

Multiple Choice

Which of the following statements is CORRECT?

• A) Long-term bonds have less interest rate price risk but more reinvestment rate risk than short-term bonds.
• B) If interest rates increase, all bond prices will increase, but the increase will be greater for bonds that have less interest rate risk.
• C) Relative to a coupon-bearing bond with the same maturity, a zero coupon bond has more interest rate price risk but less reinvestment rate risk.
• D) Long-term bonds have less interest rate price risk and also less reinvestment rate risk than short-term bonds.
• E) One advantage of a zero coupon Treasury bond is that no one who owns the bond has to pay any taxes on it until it matures or is sold.

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Definitions:

Psychodynamic

Pertains to a psychological approach that emphasizes unconscious psychological processes (for example, wishes and fears of which we're not fully aware), and contends that childhood experiences are crucial in shaping adult personality.

Social Cognitive

Pertaining to the understanding and application of how thoughts, beliefs, and cognitive processes influence social behavior and learning.

Humanistic

A psychological approach that emphasizes personal worth and the uniqueness of individuals, focusing on self-actualization and personal growth.

Parenting Style

The characterization of different approaches to raising children, including authoritative, authoritarian, permissive, and uninvolved styles.