Q467
In capital budgeting, term of bond which has great sensitivity to interest rates is
A.
long-term bonds
AnswerB.
short-term bonds
C.
internal term bonds
D.
external term bonds
Answer: Option A
Solution
Answer: Option A
Solution:
In capital budgeting, term of bond which has great sensitivity to interest rates is long-term bonds. Bond with a maturity period of more than 15 years. Long bonds pay higher interest rates but have greater credit and inflation risk. Also called long bond