All Courses > Bonds > 100
Bonds 101: Bond Market Interest Rates

Test your knowledge

Choose wisely. There is only one correct answer to each question.

0%
Keep studying!
Review your answers below to learn more.
1.
If interest rates rise 2 percent and a bond's duration is 10 years, you can expect _______.
Choose wisely. There is only one correct answer.
The bond's price to fall 20 percent. If interest rates rise 2 percent and a bond's duration is 10 years, you can expect the bond's price to fall 20 percent.
2.
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.
Smaller premiums than bonds with longer maturities. Short maturities mean small discounts.
3.
When interest rates fall, bond investors can potentially make a profit by _______.
Choose wisely. There is only one correct answer.
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.
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. The investor must do this to attract buyers, who can get higher rates elsewhere.
5.
If investors expect interest rates to rise for an extended period, the bond market is bullish.
Choose wisely. There is only one correct answer.
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.