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Answer the following question based on your understanding of interest rate risk and reinvestment risk. True or False: Assuming all else is equal, the shorter a bond’s maturity, the more its price will
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Answer the following question based on your understanding of interest rate risk and reinvestment risk. True or False: Assuming all else is equal, the shorter a bond’s maturity, the more its price will change in response to a given change in interest rates. False True

User Boris Pavlovski
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1 Answer

9 votes

Answer:

False

Step-by-step explanation:

In the case when the maturity of the bond is shorter the risk of the rate of interest would be less and on the other hand when the maturity of the bond is longer so the risk of the rate of the interest would be high this creates a negative impact on the bond price

So as per the given situation the given statement is false

User Voho
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