Which of the following best describes maturity risk?
A) If interest rates increase, bonds with long maturities will increase in price, but bonds with short maturities will decrease in price.
B) If interest rates increase, bonds with short maturities will increase in price, but bonds with long maturities will decrease in price.
C) If interest rates increase, bonds with long maturities will decrease in price more than bonds with short maturities.
D) If interest rates increase, bonds with short maturities will decrease in price more than bonds with long maturities.
E) If interest rates increase, bonds with long maturities will increase in price more than bonds with short maturities.
Correct Answer:
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