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1.
When interest rates are high, _______.
Bond prices are low. High inflation causes interest rates to rise and bond prices on the market to fall.
2.
Bonds rated above BB have a relatively high default risk.
False. Bonds rated BELOW BB have a relatively high default risk.
3.
Current yield is a bond's _______ divided by its current price.
Annual interest. The current yield is the annual interest divided by the current price.
4.
A bond with a listing of ATT6 2/3 09 matures in 2009.
True. The 09 stands for the year the bond is due to mature.
5.
A bond's yield-to-maturity measures _______.
A bond's total expected return. Yield-to-maturity measures the total amount of interest a bond will pay over its entire lifespan plus the gain or loss upon redemption.