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Question
Which of the following relationships does NOT hold in the pricing of fixed-rate assets given changes in market rate?
A. A decrease in interest rates generally leads to an increase in the value of assets.
B. Longer maturity assets have greater changes in price than shorter maturity assets for given changes in interest rates.
C. The absolute change in price per unit of maturity time for given changes in interest rates decreases over time, although the relative changes actually increase.
D. For a given percentage decrease in interest rates, assets will increase in price more than they will decrease in price for the same, but opposite increase in rates.
E. None of the above.
Answer
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