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TRUE-FALSE QUESTIONS

 

1.The coupon rate may be the market rate of interest for a bond.

 

2.The price of a bond and the market rate of interest are inversely related.

 

3.The price of a bond is the present value of future payments discounted at the coupon rate.

 

4.Yield to maturity assumes reinvestment of coupons at the same yield.

 

5.The realized yield may be influenced by coupon reinvestment rates.

 

6.If market interest rates have increased since a bond was purchased, price risk will increase               the price of the bond and reinvestment risk will decrease the return on the coupons.

 

7.A zero coupon bond has no reinvestment risk.

 

8.The higher the coupon rate, the lower the bond price volatility.

 

9.Price risk is a measure of bond volatility.

 

10.Short-term bonds have greater price risk compared to long-term bonds.

 

 

 

 

1

 

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