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Bonds 101: Bond Market Interest Rates

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1.
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.
2.
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.
3.
When interest rates fall, bond investors can potentially make a profit by _______.
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Selling bonds. If their bonds pay a higher interest rate than newly issued bonds would, the investors could find their bonds in great demand and thus sell them for a profit.
4.
A continuous rise in bond prices indicates a bullish market.
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True. It is accompanied by falling interest rates.
5.
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.