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Bonds 101: Bond Market Interest Rates

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1.
When bond prices fall, bond yields _______.
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Rise. When bond prices fall, bond yields rise.
2.
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.
3.
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.
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.
If investors expect interest rates to rise for an extended period, the bond market is bullish.
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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.