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Which of the following is not true about bonds? In all of the statements, assume other things are held constant A 20-year zero-coupon bond has
Which of the following is not true about bonds? In all of the statements, assume other things are held constant A 20-year zero-coupon bond has less reinvestment rate risk than a 20-year coupon bond. For any given maturity, a given percentage point increase in the interest rate causes a smaller dollar capital loss than the capital gain stemming from an identical decrease in the interest rate. Price sensitivity, that is, the change in price due to a given change in the required rate of retur, increases as a bond's maturity increases. . From a borrower's point of view, interest paid on bonds is tax-deductible. For a given bond of any maturity, a given percentage point increase in the interest rate (rd) causes a larger dollar capital loss than the capital gain stemming from an identical decrease in the interest rate
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