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

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