The values of outstanding bonds change whenever the going rate of interest changes. In general, short-term interest rates are more volatile than long-term interest rates. Therefore, short-term bond prices are more sensitive to interest rate changes than are long-term bond prices. Is that statement true or false? Explain. (Hint: Make up a "reasonable" example based on a 1-year and 20-year bond to help answer the question.)© BrainMass Inc. brainmass.com June 3, 2020, 11:29 pm ad1c9bdddf
This statement is false. The opposite is true. Because short-term bonds are available for a shorter period of time so the interest rate will not going to change much.
In 1 year bonds will exist under the same interest rate ...
10-year bonds are studied.