Which of the following statements is correct?
A) Short-term debt instruments are more volatile in price than long-term instruments.
B) Coupon rates are generally fixed when the bond is issued.
C) Bond prices and market interest rates move together.
D) The higher the coupon of a bond, the lower its price.

Question

Quizplus · Accepted Answer

Coupon rates are typically set when the bond is issued and remain fixed throughout its life. A) is incorrect because generally, long-term debt instruments are more volatile in price than short-term instruments. C) is incorrect because bond prices and market interest rates generally move in opposite directions. And D) is incorrect because the higher the coupon of a bond, the higher its price.

Which of the Following Statements Is Correct