chapter 7

Select the sttements about bonds that are correct.
1.Bond prices move inversely to interest rates.
2.The longer the term to maturity the gteater the price volatility.
3.Bonds with low coupon rates have more price volatility than bonds with high coupon rates.
4.Bond prices are more volatile when interest rates are high.
A.1 only; B.4 only; C.1,2 and 3; D.2 and 4 only.  Answer: B
Why is answer B correct?