SIE Exam Question 774: Answer and Explanation

Question: 774

____ Lower-coupon bonds are __________ affected by interest rate changes than higher-coupon bonds.

• A. More
• B. Less
• C.
• D.

Correct Answer: A

Explanation:

Lower-coupon bonds are more affected by interest rate changes than higher-coupon bonds. Lower-coupon bonds have more price volatility.