Use the following information for Questions. Peter
is considering two bonds: Bond A yield 10%
Bond B yield 7 % Which of the following statements about how the features of a bond
impact interest rate risk is FALSE
A. Bond price movements depend upon the direction and magnitude of changes
in interest rates.
B. All else equal, a longer-term bond is more sensitive to interest rates
than a shorter-term bond.
C. An inverse relationship between interest rates and bond prices means that
the greater the change in interest rates, the less the change in fixed-coupon
bond prices.