Which answer is FALSE regarding bond prices and interest rates?
A) Bond prices and interest rates move in opposite directions.
B) The price of a bond is the present value of the coupon payments and the face value.
C) The prices of short-term bonds display greater price sensitivity to interest rate changes than do the prices of long-term bonds.
D) Interest rate risk can be described as the risk that changes in market interest rates will cause fluctuations in the bond's price.
Correct Answer:
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