Which of the following has the highest interest rate risk?
A)a 20-year U.S.Treasury Bond
B)Bendix Corporation six-month commercial paper
C)a six-month money market certificate at a federally issued bank
D)a Southwest Airlines bond maturing in four years

Question

Quizplus · Accepted Answer

A 20-year U.S. Treasury bond has the highest interest rate risk because it has a longer maturity, meaning there is more time for interest rates to change and affect its value. Shorter-term securities like commercial paper and money market certificates are less affected by interest rate changes. The Southwest Airlines bond has a shorter maturity than the Treasury bond, making it less exposed to interest rate changes.

Which of the Following Has the Highest Interest Rate Risk