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Bonds 101: Bond Market Interest Rates

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1.
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.
2.
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.
3.
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.
4.
When bond prices fall, bond yields _______.
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Rise. When bond prices fall, bond yields rise.
5.
Changing interest rates affect bonds with different maturities to the same degree.
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False. Changing interest rates affect bonds with varying maturities differently.