CHAPTER 5INTEREST RATES AND BOND VALUATIONAnswers to Concepts Review and Critical Thinking Questions1.No. As interest rates fluctuate, the value of a Treasury security will fluctuate. Long-term Treasury securities have substantial interest rate risk. 2.All else the same, the Treasury security will have lower coupons because of its lower default risk, so it will have greater interest rate risk.3.No. If the bid were higher than the ask, the implication would be that a dealer
