(I)Prices of longer-maturity bonds respond less dramatically to changes in interest rates. (II)Prices and returns for long-term bonds are less volatile than those for shorter-term bonds.
A) (I) is true, (II) false.
B) (I) is false, (II) true.
C) Both are true.
D) Both are false.

Question

Quizplus · Accepted Answer

Longer-maturity bonds are more sensitive to interest rate changes, making their prices and returns more volatile than those of shorter-term bonds.

(I)Prices of Longer-Maturity Bonds Respond Less Dramatically to Changes in Interest