Help
Course Catalog > Bonds > 100
Bonds 101: Bond Market Interest Rates

Test your knowledge

Choose wisely. There is only one correct answer to each question.

0%
Keep studying!
Review your answers below to learn more.
1.
Changing interest rates affect bonds with different maturities to the same degree.
Choose wisely. There is only one correct answer.
False. Changing interest rates affect bonds with varying maturities differently.
2.
When interest rates fall, bond investors can potentially make a profit by _______.
Choose wisely. There is only one correct answer.
Selling bonds. If their bonds pay a higher interest rate than newly issued bonds would, the investors could find their bonds in great demand and thus sell them for a profit.
3.
Duration is used to predict how much bond prices will change due to fluctuating interest rates.
Choose wisely. There is only one correct answer.
True. Duration takes into account the weighted average of a bond's coupon rates, its principal, and the time until the rates are paid.
4.
If investors expect interest rates to rise for an extended period, the bond market is bullish.
Choose wisely. There is only one correct answer.
False. If investors expect interest rates to rise for an extended period, the bond market is bearish because bond prices will fall, indicating a disinterest in bonds.
5.
The amount of fixed interest a bond pays each year until it matures is called its _______.
Choose wisely. There is only one correct answer.
Coupon rate. Premiums and discounts are not interest rates.