Which of the following statements is correct? A. Long term bonds have less inter

ID: 2629603 • Letter: W

Question

Which of the following statements is correct?

A. Long term bonds have less interest rate price but more reinvestment rate risk than short-term bonds

B. Long term bonds have less interest rate price risk and also less reinvestment rate risk than short-term bonds

c. Relative to a coupon-bearing bond with the same maturity a zero coupon bond has more interest rate risk but less reinvestment rate risk

d. if interest rate increase, all bond prices will increase, but the increase will be greater for bonds that have less interst rate risk

e. one advantage of a zero coupon treasury bond is that no one who owns the bond has to pay any taxes on it until it matures or is sold

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