Interest vs. reinvestment rate risk Answer: c Diff: T
59. Which of the following statements is most correct?
a. A 10-year bond would have more interest rate risk than a 5-year bond, but all 10-year bonds have the same interest rate risk.
b. A 10-year bond would have more reinvestment rate risk than a 5-year bond, but all 10-year bonds have the same reinvestment rate risk.
c. If their maturities were the same, a 5 percent coupon bond would have more interest rate risk than a 10 percent coupon bond.
d. If their maturities were the same, a 5 percent coupon bond would have less interest rate risk than a 10 percent coupon bond.
e. Zero coupon bonds have more interest rate risk than any other type bond, even perpetuities.
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