Professor Wales is concerned about the interest rate risk exposure from her bond investments. Assuming all else is equal, what do you think she will prefer? I) Prefer zero coupon bonds to bonds with coupons II) Prefer bond issue at premium (price higher than par) to bond issue at discount (price lower than par) III) Prefer long-term bonds to short-term bonds

Question 1 options: I and III

II and III

II

I