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Bonds 101: Bond Market Interest Rates

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1.
The amount of fixed interest a bond pays each year until it matures is called its _______.
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Coupon rate. Premiums and discounts are not interest rates.
2.
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.
3.
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.
4.
When interest rates fall, assuming an equal amount for all bond maturities, bonds with short maturities will have _______.
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Smaller premiums than bonds with longer maturities. Short maturities mean small discounts.
5.
When bond prices fall, bond yields _______.
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Rise. When bond prices fall, bond yields rise.