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Portfolios 409: Bond Basics: Overview

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1.
Evaluations of a firm's ability to pay its debts are expressed through _______.
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Credit ratings. Credit ratings range from AAA down to D and provide information about a firm's ability to pay its debts.
2.
The higher a bond's duration, _______ it responds to changes in interest rates.
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The more. Duration measures a bond's sensitivity to changes in interest rates.
3.
High-yield bonds will do poorly when _______.
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There's a recession. Lower-rated high-yield bonds will do poorly during a recession, as issuers will have a tougher time meeting their high debt payments.
4.
A bond lasts a certain length of time, after which it reaches its what?
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Maturity. A bond's maturity is the date when it needs to be repaid.
5.
When interest rates fall, what do bond prices do?
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Rise