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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 a 20-year bond to help answer the question.) THE EXAMPLE MUST BE ORIGINAL AND CALCULATED USING A FORMULA.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92058307

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