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Bonds 101: Bond Market Interest Rates

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1.
When an investor has to sell his or her bond at a discount, it usually means _______.
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Interest rates have risen. The investor must do this to attract buyers, who can get higher rates elsewhere.
2.
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.
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.
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 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.