Which Statement Regarding Rate Risk Is True

question 78

Multiple Choice

Which statement regarding rate risk is true?

• A)A zero coupon bond of any maturity will have more interest rate price risk than any coupon bond, even a perpetuity.
• B)If their maturities and other characteristics were the same, a 5% coupon bond would have more interest rate price risk than a 10% coupon bond.
• C)A 10-year coupon bond would have more reinvestment rate risk than a 5-year coupon bond, but all 10-year coupon bonds have the same amount of reinvestment rate risk.
• D)If their maturities and other characteristics were the same, a 5% coupon bond would have less interest rate price risk than a 10% coupon bond.

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Definitions:

Conforming Goods

Merchandise or products that meet the specifications and standards outlined in a purchase contract.

Acceptance

A promise or act on the part of an offeree indicating a willingness to be bound by the terms and conditions contained in an offer. Also, the acknowledgment of the drawee that binds the drawee to the terms of a draft.

Purchase Order

A document issued by a buyer to a seller, indicating types, quantities, and agreed prices for products or services.

Title

Legal ownership of property, evidenced by a document or record.