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21.Interest rate risk the risk that bond prices will fluctuate

Question : 21.Interest rate risk the risk that bond prices will fluctuate : 1400441

 

21.Interest rate risk is the risk that bond prices will fluctuate as interest rate changes.

a.True

b.False

22.As interest rates fall, the prices of bonds decline.

a.True

b.False

23.Higher coupon bonds have greater interest rate risk.

a.True

b.False

24.All other things being equal, a given change in the interest rates will have a greater impact on the price of a low-coupon bond than a higher-coupon bond with the same maturity.

a.True

b.False

25.Bonds with a call provision sell at lower market yields than comparable noncallable bonds.

a.True

b.False

26.The risk that the lender may not receive payments as promised is called default risk.

a.True

b.False

27.U.S. Treasury securities do not have any default risk and are the best proxy measure for the risk-free rate.

a.True

b.False

28.Ascending or normal yield curves are upward-sloping yield curves that occur when an economy is heading into recession.

a.True

b.False

29.If investors believe inflation will be increasing in the future, the prevailing yield will be downward sloping.

a.True

b.False

30.The real rate of interest varies with the business cycle, with the highest rates seen at the end of a period of business expansion and the lowest at the bottom of a recession.

a.True

b.False

 

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