Which Statement Regarding Bonds Is True

question 63

Multiple Choice

Which statement regarding bonds is true?

• A)10-year, zero coupon bonds have higher reinvestment rate risk than 10-year, 10% coupon bonds.
• B)A 10-year, 10% coupon bond has less reinvestment rate risk than a 10-year, 5% coupon bond (assuming all else is equal).
• C)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.
• D)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.

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Definitions:

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