Comparing long-term bonds with short-term bonds, long-term bonds are _____ volatile and therefore experience _____ price change compared with short-term bonds for the same interest rate shift.
A) less; less
B) less; more
C) more; more
D) more; less
E) more; the same

Question

Quizplus · Accepted Answer

Long-term bonds are more volatile and experience more price change compared to short-term bonds for the same interest rate shift because they have a longer duration, making them more sensitive to changes in interest rates.

Comparing Long-Term Bonds with Short-Term Bonds, Long-Term Bonds Are _____