In capital budgeting, term of bond which has great sensitivity to interest rates is
A
long-term bonds
B
short-term bonds
C
internal term bonds
D
external term bonds
Correct Answer: long-term bonds
In capital budgeting, term of bond which has great sensitivity to interest rates is long-term bonds. Bond with a maturity period of more than 15 years. Long bonds pay higher interest rates but have greater credit and inflation risk. Also called long bond