Exam 4: Understanding Interest Rates

In which of the following situations would you prefer to be the borrower?

The sum of the current yield and the rate of capital gain is called the

What is the return on a 5 percent coupon bond that initially sells for $1,000 and sells for $1,200 next year?

If the interest rates on all bonds rise from 5 to 6 percent over the course of the year,which bond would you prefer to have been holding?

Economists consider the ________ to be the most accurate measure of interest rates.

A credit market instrument that pays the owner a fixed coupon payment every year until the maturity date and then repays the face value is called a

An $8,000 coupon bond with a $400 coupon payment every year has a coupon rate of

The dollar amount of the yearly coupon payment expressed as a percentage of the face value of the bond is called the bond's

Duration is

The ________ interest rate is adjusted for expected changes in the price level.

Examples of discount bonds include

Prices and returns for ________ bonds are more volatile than those for ________ bonds,everything else held constant.

An asset's interest rate risk ________ as the duration of the asset ________.

Which of the following are true concerning the distinction between interest rates and returns?

All of the following are examples of coupon bonds except

A ________ pays the owner a fixed coupon payment every year until the maturity date,when the ________ value is repaid.

If a $5,000 coupon bond has a coupon rate of 13 percent,then the coupon payment every year is

To claim that a lottery winner who is to receive $1 million per year for twenty years has won $20 million ignores the process of

The price of a consol equals the coupon payment

If you expect the inflation rate to be 15 percent next year and a one-year bond has a yield to maturity of 7 percent,then the real interest rate on this bond is