Which of the Following Statements About Bonds Is True

question 52

Multiple Choice

Which of the following statements about bonds is true?

• A)As the maturity date of a bond approaches,the market value of a bond will become more volatile.
• B)Long-term bonds have less interest rate risk than do short-term bonds.
• C)Bond prices move in the same direction as market interest rates.
• D)If market interest rates are above a bond's coupon interest rate,then the bond will sell below its face value.

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Definitions:

Cartel

An association of independent businesses or countries that collaborate to control prices and limit competition within a particular market or industry.

Market Price

The prevailing cost at which one can buy or sell an asset or service.

Marginal Cost

The augmentation in total costs associated with the production of an additional unit of a product or service.

Cartel

A group of independent market participants who collude to control prices and production in order to monopolize a market.