Which of the following statements is most accurate?
A) Short-term bonds are more volatile than intermediate term bonds.
B) Short-term bonds are more volatile than long-term bonds.
C) Short-term bonds are less volatile than long-term bonds.
D) Short-term bonds have no interest rate risk.

Question

Quizplus · Accepted Answer

Short-term bonds are generally less volatile than long-term bonds because they are less sensitive to interest rate changes. This is because the closer a bond is to its maturity date, the less its price is affected by changes in interest rates.

Which of the Following Statements Is Most Accurate