Reference no: EM13547909

1) An equal increase in all bond interest rates

A) increases the return to all bond maturities by an equal amount.

B) decreases the return to all bond maturities by an equal amount.

C) has no effect on the returns to bonds.

D) decreases long-term bond returns more than short-term bond returns.

2) Which of the following are generally true of bonds?

A) The only bond whose return equals the initial yield to maturity is one whose time to maturity is the same as the holding period.

B) A rise in interest rates is associated with a fall in bond prices, resulting in capital gains on bonds whose terms to maturity are longer than the holding periods.

C) The longer a bond"s maturity, the smaller is the size of the price change associated with an interest rate change.

D) Prices and returns for short-term bonds are more volatile than those for longer-term bonds.