Everything Else Equal, the ________ the Maturity of a Bond

question 49

Multiple Choice

Everything else equal, the ________ the maturity of a bond and the ________ the coupon, the greater the sensitivity of the bond's price to interest rate changes.

• A) longer; higher
• B) longer; lower
• C) shorter; higher
• D) shorter; lower

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Definitions:

Estimable Liability

A financial obligation or debt that can be measured or estimated with a reasonable level of accuracy.

Probable Likelihood

A high chance or probability that an event will occur.

Accrual

A method of accounting that records income and expenses when they are earned or incurred, regardless of when the cash transactions occur.

Disclosure

The act of providing essential information or facts, especially those that may influence the decision-making of investors or stakeholders.