Which of the following statements regarding the economics of fixed-income securities are TRUE?
Short-term interest rates are more volatile than long-term rates.
Long-term interest rates are more volatile than short-term rates.
Short-term bond prices react more than long-term bond prices given a change in interest rates.
Long-term bond prices react more than short-term bond prices given a change in interest rates.
A) II and IV.
B) I and IV.
C) I and III.
D) II and III.
Answer: B) I and IV.