Which of the following statements is false?
A) Bond prices converge to the bond's face value due to the time effect, but simultaneously move up and down due to unpredictable changes in bond yields.
B) As interest rates and bond yields fall, bond prices will rise.
C) Bonds with higher coupon rates are more sensitive to interest rate changes.
D) Shorter maturity zero coupon bonds are less sensitive to changes in interest rates than are longer-term zero coupon bonds.

Question

Quizplus · Accepted Answer

Bonds with lower coupon rates are actually more sensitive to interest rate changes, as they have a longer duration and therefore a higher sensitivity to changes in interest rates.

Which of the Following Statements Is False