Which of the following statements is true? select here select here a. A decrease

Question

Which of the following statements is true? select here select here a. A decrease in interest rates causes a decrease in bond prices. b. A decrease in bond prices causes interest rates to decrease. c. An increase in interest rates causes bond prices to decrease. d. Bond prices and interest rates are not connected. Which of the following bonds will be most sensitive to a change in interest rates? select here select here a. A 10-year bond with a 52,000 face value with a coupon rate of 5.8% paid semi-annually. b. A 30-year bond with a 51,000 face value with a coupon rate of 5.4% paid annually. c. A 15-year bond with a 55,000 face value with a coupon rate of 6.2% paid annually. A d. A 20-year bond with a 53,000 face value with a coupon rate of 5.4% paid semi-annually. 3 Which of the following bonds will be most sensitive to a change in interest rates? select here select here 4 a. A 10-year bond with a $2,000 face value with a coupon rate of 6.4% paid semi-annually. b. A 10-year bond with a $2,000 face value with a coupon rate of 6.8% paid semi-annually. c. A 10-year bond with a $2,000 face value with a coupon rate of 6.2% paid annually. d. A 10-year bond with a $2,000 face value with a coupon rate of 6.1% paid annually. a. When the market interest rates are equal to the market rate of the zero-coupon bond when it was issued. b. Except at maturity, a zero-coupon bond will always sell at a price less than its face value. c. When the market interest rates are lower than the market rate of the zero-coupon bond when it was issued. d. When the market interest rates are higher than the market rate of the zero-coupon bond when it was issued. select here

Explanation / Answer

1.c> An increase in bond price causes the bond prices to decrease.

2.b>A 30 year bond with a face value of 1000 and coupon rate of 5.4% paid annually.

3.d>A 10 year bond with face value 2000 and coupon rate 6.1% paid annually.

4.b>Except at maturity , a zero coupon bond will always sell at a price less than its face value.

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