Bond prices change whenever the market interest rate changes. In general, short-term interest rates are more volatile th

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Bond Prices Change Whenever The Market Interest Rate Changes In General Short Term Interest Rates Are More Volatile Th 1 (16.74 KiB) Viewed 54 times

Bond prices change whenever the market interest rate 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 this statement true or false. Explain your answer by making up a "reasonable" numerical example based on a 1-year bond and a 20-year bond issued by the same company to help answer the question Assume now that you are considering to invest $5,000 in one of the two bonds in your example, but need to sell the bond after 6 months to pay tuition Which bond should be your choice? Justify your answer.