Wording is a bit tricky to me in this homework question. Please help me out and

Question

Wording is a bit tricky to me in this homework question. Please help me out and give explaination. Thanks!

Which of the following statements is CORRECT?

a.   All else equal, high-coupon bonds have less reinvestment risk than low-coupon bonds.

b.   All else equal, long-term bonds have less price risk than short-term bonds.

c.   All else equal, low-coupon bonds have less price risk than high-coupon bonds.

d.   All else equal, short-term bonds have less reinvestment risk than long-term bonds.

e.   All else equal, long-term bonds have less reinvestment risk than short-term bonds.

Explanation / Answer

e.   All else equal, long-term bonds have less reinvestment risk than short-term bonds.

Since Long term bond have not to be invested each time after its maturity in comparision to short term bond, As Short term bond mature early than long term bond which have the greater reinvestment risk.

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