Question

Interest rate risk increases as the coupon payment decreases. the coupon rate increases. either the time...

Interest rate risk increases as

the coupon payment decreases.

the coupon rate increases.

either the time to maturity or the coupon rate increases.

the time to maturity decreases.

a bond matures.

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Answer #1

Interest rate risk will be increasing as coupon payments will be decreasing as it will mean that the coupon rate is also decreasing with the coupon payment and when there would be a lesser coupon rate than the prevailing market rate of interest will mean that there is a high amount of interest rate risk.

when there is a higher coupon rate or coupon rate will be increasing,then interest rate risk will be lower

when the time to maturity will be increasing,it will also mean that interest rate risk will be increasing.

Correct answer will be option (A) coupon payment decreases.

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