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Course Catalog
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Bonds
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100
Bonds 101:
Bond Market Interest Rates
Test your knowledge
Choose wisely. There is only one correct answer to each question.
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Review your answers below to learn more.
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
Interest rates have fallen
Interest rates have stayed the same
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.
Choose wisely. There is only one correct answer.
True
False
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.
Choose wisely. There is only one correct answer.
True
False
False. The higher a bond's duration, the higher its price risk.
4.
The lower a bond's credit risk, the higher its yield.
Choose wisely. There is only one correct answer.
True
False
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.
Bigger premiums than bonds with longer maturities
Smaller premiums than bonds with longer maturities
The same premiums as bonds with longer maturities
Smaller premiums than bonds with longer maturities. Short maturities mean small discounts.
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