Question
Regarding bond pricing theorems, which of the statements below is the least accurate? a) The lower the bond's coupon rate is, the less its price
Regarding bond pricing theorems, which of the statements below is the least accurate?
a) The lower the bond's coupon rate is, the less its price will fluctuate when the yield to maturity changes.
b) There is an inverse relationship between bond prices and market rates.
c) All else equal, if the market rate (i.e. yields) increases then bond prices decrease.
d) Given two bonds that are identical otherwise, the bond with longer term maturity has greater interest rate risk.
e) If the market rate exceeds the coupon rate, then the bond price will be less than par.
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