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Considering the Government Bond Described in Question #63, If the Investor

Question 6

Multiple Choice

Considering the government bond described in question #63, if the investor in the question has a desired holding period of 7 years, this investor should:


A) Buy the bond because his or her interest rate risk will then be zero
B) Look for another security if he or she desires to force interest-rate risk to zero
C) Wait until the bond's yield to maturity falls to 10 percent for then the bond will sell at par and the investor will be free of interest-rate risk
D) Look for a security with a higher coupon rate but the same maturity because the investor will then have a better chance of minimizing interest-rate risk
E) None of the above are advisable moves for the investor given the bond's characteristics and the investor's desired holding period

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