2B3D WHICH ONE OF THE FOLLOWING STATEMENTS CONCERNING DEBT INSTRUMENT...
120.
CSO: 2B3c
LOS: 2B3d
Which one of the following statements concerning debt instruments is correct?
a.
The coupon rate and yield of an outstanding long-term bond will change over
time as economic factors change.
b.
A 25-year bond with a coupon rate of 9% and one year to maturity has more
interest rate risk than a 10-year bond with a 9% coupon issued by the same firm
with one year to maturity.
c.
For long-term bonds, price sensitivity to a given change in interest rates is greater
the longer the maturity of the bond.
d.
A bond with one year to maturity would have more interest rate risk than a bond
with 15 years to maturity.