Holding other factors constant, the interest-rate risk of a coupon bond is lower when the bond's
A. term to maturity is lower.
B. coupon rate is higher.
C. yield to maturity is lower.
D. term to maturity is lower and coupon rate is higher.
E. All of the options are correct.
D. term to maturity is lower and coupon rate is higher.
The longer the maturity, the greater the interest-rate risk. The lower the coupon rate, the greater the interest-rate risk. The lower the yield to maturity, the greater the interest-rate risk. These concepts are reflected in the duration rules; duration is a measure of bond price sensitivity to interest rate changes (interest-rate risk).
You might also like to view...
When a company encases its product in a blister pack to protect the item, it is using the packaging to communicate its benefits.
Answer the following statement true (T) or false (F)
What is an appeals to misplaced authority?
What will be an ideal response?
If your e-mail message is an announcement or information that requires no response, use the word "REQUEST" in all caps as the first word in the subject line
Indicate whether the statement is true or false
Janet, an aspiring news reader, was rejected at her job interview because her voice was too shrill. Considering this feedback, which of the following attributes of voice should Janet work on?
A. Tempo B. Enunciation C. Pronunciation D. Pitch