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Bonds 101: Bond Market Interest Rates

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1.
If interest rates rise 2 percent and a bond's duration is 10 years, you can expect _______.
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The bond's price to fall 20 percent. If interest rates rise 2 percent and a bond's duration is 10 years, you can expect the bond's price to fall 20 percent.
2.
When interest rates fall, bond prices _______.
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Rise. Because rates on existing bonds may be higher than bonds issued with the lowered rates, owners of existing bonds can sell theirs for a profit.
3.
A continuous rise in bond prices indicates a bullish market.
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True. It is accompanied by falling interest rates.
4.
The longer a bond's maturity, the larger its discount when interest rates rise.
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True. The longer a bond's maturity, the larger its discount when interest rates rise.
5.
When bond prices fall, bond yields _______.
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Rise. When bond prices fall, bond yields rise.