Bonds with ________ terms to maturity are ________ sensitive to interest rate movements than bonds that have short terms remaining until maturity.
A) middle; less
B) longer; less
C) longer; more
D) longer; equally

Question

Quizplus · Accepted Answer

Bonds with longer terms to maturity are more sensitive to interest rate movements than bonds that have short terms remaining until maturity. This is because the present value of the bond's future cash flows (coupons and principal) is more affected by changes in interest rates when those cash flows are further in the future.

Bonds with ________ Terms to Maturity Are ________ Sensitive to Interest

Bonds with Terms to Maturity Are Sensitive to Interest