n NISM Certifications
V-A NISM Series V-A
Medium

Identify the security which will be most impacted by interest rate movements in the economy.

Practice question from Nism VA Mock Test 5 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Public Sector Units (PSU) Bonds

  2. B

    Money Market securities

  3. Government securities

    Correct answer

  4. D

    Corporate debentures

Why this is the answer

Government securities (especially long-term bonds) are highly sensitive to interest rate movements due to their longer duration. As interest rates rise, the prices of government securities typically fall more sharply than other securities.

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