Answer: Short-term rates are more volatile than long-term rates, and long-term bond prices are more volatile than short-term bond prices.

## Explanation **Correct Answer: B** This statement is accurate because: 1. **Short-term rates are more volatile than long-term rates**: Short-term interest rates are more sensitive to monetary policy changes, economic cycles, and market expectations, making them more volatile than long-term rates which reflect longer-term economic expectations. 2. **Long-term bond prices are more volatile than short-term bond prices**: Bond price volatility is measured by duration. Long-term bonds have higher duration, meaning their prices are more sensitive to interest rate changes. For a given change in interest rates, long-term bond prices will fluctuate more than short-term bond prices. **Why other options are incorrect:** - **Option A**: Incorrect because while short-term rates are more volatile, short-term bond prices are actually less volatile than long-term bond prices due to lower duration. - **Option C**: Incorrect because long-term rates are typically less volatile than short-term rates, though long-term bond prices are indeed more volatile.

Author: LeetQuiz Editorial Team