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

The interest rate sensitivity of a bond is determined by its maturity - State whether True or False?

Practice question from NISM Series V A - Mock Test 3 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. True

    Correct answer

  2. B

    False

Why this is the answer

Interest rate sensitivity refers to how the price of a bond changes in response to changes in interest rates. The longer the maturity of a bond, the more sensitive its price is to interest rate fluctuations. Longer-duration bonds experience greater price changes when interest rates rise or fall.

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