about the relationship between bond c E) None of the above are true. 17. Interest Rate Sensitivity Which of the following statements prices and interest rates are correet? I. The sensitivity of bond prices to changes in interest rates increases at higher interest rate levels II. Bond prices and interest rates are inversely related III. Long term bond d prices are more sensitive to an interest rate change than short term bonds price sensitivity to an interest rate change is directly related to the bond's couporn IV. A bond's a. I, II, III and IV b. I and II only c. II1 and IV only d. I1 and III only 18. Interest Rate Sensitivity An increase in a bond's yield to maturity results in a smaller price decline than the gain associated with a decrease in yield. This result is due to the nonlinear relationship between bond prices and interest rates a. b. the relationship between bond maturity and price sensitivity d. the inverse relationship between bond prices and interest rates the relationship between the size of the coupon and price sensitivity