Everything else being equal,the _______ the time to maturity on a fixed-interest security,the _______ sensitive it is to changes in interest rates.
A) longer; less
B) longer; more
C) shorter; more
D) shorter; extra

Question

Quizplus · Accepted Answer

According to the question, everything else is equal, so we only have to consider the time to maturity. The longer the time to maturity, the more sensitive the fixed-interest security is to changes in interest rates. This is because the longer the time to maturity, the greater the risk that interest rates will change during that time, leading to a greater potential impact on the security's value. Therefore, option B, longer; more, is the correct answer.

Everything Else Being Equal,the _______ the Time to Maturity on a Fixed-Interest