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1.
When an investor has to sell his or her bond at a discount, it usually means _______.
Choose wisely. There is only one correct answer.
Interest rates have risen. The investor must do this to attract buyers, who can get higher rates elsewhere.
2.
Stock and bond values sometimes change in opposite directions.
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True. This can be the result of trends in the financial health of companies.
3.
The higher a bond's duration, the lower its price risk.
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False. The higher a bond's duration, the higher its price risk.
4.
The lower a bond's credit risk, the higher its yield.
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False. The lower a bond's credit risk, the lower its yield. Low-risk bonds generally pay less interest than those that carry higher risk.
5.
When interest rates fall, assuming an equal amount for all bond maturities, bonds with short maturities will have _______.
Choose wisely. There is only one correct answer.
Smaller premiums than bonds with longer maturities. Short maturities mean small discounts.