Quiz Ch 03 – Relationship Between Interest Rates and Bond Prices
Principles of Corporate Finance
Brealey, Myers, and Allen
13th Edition
Which correctly characterizes the relationship between bond prices and interest rates?
Which correctly characterizes the relationship between bond prices and interest rates?
True or false: Most bonds in the United States distribute coupon payments on an annual basis.
True or false: Bondholders CANNOT receive any remaining payments from the bond after a bond defaults.
True or false: Viewing the yield to maturity of a bond as an internal rate of return provides valuable insight.
True or false: Bonds with identical maturity, risk rating, and face value but different coupon rates will exhibit a longer duration for the bond with a lower coupon rate.
True or false: Greater volatility is associated with a longer duration for a bond.
True or false: The duration of a bond mirrors its maturity.
True or false: According to the expectations theory, a decreasing term structure is solely attributed to investors anticipating a decline in spot interest rates.
True or false: In the scenario of a flat term structure, the spot interest rate for 9 years equals the spot interest rate for 10 years.
True or false: Real interest rates have historically shown greater fluctuations than nominal interest rates over many years.