Which statement istrue:Group of answer choicesLong-term bonds are riskier, compared to short-term bonds,...

Which statement is true:

Group of answer choices

Long-term bonds are riskier, compared to short-term bonds, because they are more sensitive to interest rate changes.

Short-term bonds are riskier, compared to long-term bonds, because they are more sensitive to interest rate changes.

Coupon bonds are riskers, compared to zero-coupon bonds, because investors will only receive coupons if the issuer defaults.

Zero-coupon bonds are usually premium bonds.

Solutions

Expert Solution

Ans- Option 1. Long-term bonds are riskier, compared to short-term bonds, because they are more sensitive to interest rate changes.

- Long-term Bonds and low Coupon rate(or Zero-coupon) Bonds are more risker than Short term Bond and high coupon bonds because they are more sensitive to Market Interest rates.

When Market Interest rate chnages the impact of chnage in Price is higher in there cases.

Zero-coupon bonds are usually Discount bonds.

jeff jeffy answered 2 years ago

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