Which of the following statements about bonds is true? a. Bond prices move in th

Question

Which of the following statements about bonds is true?

          a.   Bond prices move in the same direction as market interest rates.

          b.   If market interest rates change, long-term bonds will fluctuate more in value than short-term bonds.

          c.   Long-term bonds are less risky than short-term bonds.

          d.   If market interest rates are higher than a bond’s coupon interest rate, then the bond will sell above its par value.

          e.   If market interest rates change, higher coupon bonds will fluctuate more in value than lower coupon bonds.

Explanation / Answer

b.   If market interest rates change, long-term bonds will fluctuate more in value than short-term bonds.

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