Which of the following statements are CORRECT? Statement I: A change in a bond's interest rate risk has a greater price impact on bonds with longer maturities.
Statement II: Government bonds have lower default risk than corporate bonds or municipal bonds.
Statement III: Trading volume is greater for corporate bonds than government bonds.

Question

Quizplus · Accepted Answer

Statement I is correct because bonds with longer maturities are more sensitive to changes in interest rates, meaning their prices are more affected by those changes. Statement II is also correct because government bonds are generally considered to have lower default risk due to the backing of the government, compared to corporate or municipal bonds which are subject to the financial health of the issuing entity. Statement III is incorrect; government bonds, especially those issued by stable governments, tend to have higher trading volumes due to their perceived safety and liquidity.

Which of the Following Statements Are CORRECT? Statement I: a Change