Which of the Following Statements Is CORRECT

question 9

Multiple Choice

Which of the following statements is CORRECT?

• A) A 10-year, 10% coupon bond has less reinvestment rate risk than a 10-year, 5% coupon bond (assuming all else equal).
• B) The total return on a bond during a given year is the sum of the coupon interest payments received during the year and the change in the value of the bond from the beginning to the end of the year.
• C) The price of a 20-year, 10% bond is less sensitive to changes in interest rates than the price of a 5-year, 10% bond.
• D) A $1, 000 bond with $100 annual interest payments that has 5 years to maturity and is not expected to default would sell at a discount if interest rates were below 9% and at a premium if interest rates were greater than 11%.
• E) 10-year, zero coupon bonds have higher reinvestment rate risk than 10-year, 10% coupon bonds.

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Definitions:

Dedifferentiation

The process by which specialized cells lose their specialization during regeneration or in response to injury.

Differentiation

The process by which cells or tissue undergo a change toward a more specialized form or function.

Mitosis

A process of cell division that results in two genetically identical daughter cells from a single parent cell, crucial for growth and repair in organisms.

Seven

A cardinal number that follows six and precedes eight, often symbolically used in various cultures.