Which of the following statements is CORRECT? One advantage of a zero coupon Tre
ID: 1233025 • Letter: W
Question
Which of the following statements is CORRECT?One advantage of a zero coupon Treasury bond is that no one who owns the bond has to pay any taxes on it until it matures or is sold.
Long-term bonds have less interest rate price risk but more reinvestment rate risk than short-term bonds.
If interest rates increase, all bond prices will increase, but the increase will be greater for bonds that have less interest rate risk.
Relative to a coupon-bearing bond with the same maturity, a zero coupon bond has more interest rate price risk but less reinvestment rate risk.
Long-term bonds have less interest rate price risk and also less reinvestment rate risk than short-term bonds.
Explanation / Answer
One advantage of a zero coupon Treasury bond is that no one who owns the bond has to pay any taxes on it until it matures or is sold.
this statement is corect