Exam 4: Interest Rates

Brittany and Christina both buy bonds with yield to maturity of 4% but Brittany's bond has 2 years to maturity and Christina's has 5. After one year, yields for these bonds rise.

The price of a bond is directly related to

Susan decides that moving in with her boyfriend was a mistake. This is a(n) _____ judgment.

The chance that a bond issuer won't make promised payments is called

A one-year discount bond with face value $1,000 and price $800 has a yield of

The accuracy of the current yield increases with the time to maturity of a bond.

The real interest rate is a more accurate measure of the cost of borrowing than the nominal rate.

The opportunity cost of money is

A one-year discount bond has a face value of F, and a price of P. What is the formula for the yield?

A borrower periodically pays a portion only of the principal in a fixed-payment loan.

A bond is bought at par and market yields rise after purchase. If the bond is held to maturity, the rate of return at maturity will be _____ the yield at purchase.

The coupon payment for a consol is $100 and the yield to maturity is 5%. What is the price of the bond?

The present value of a future payment is higher the longer the period of time until the payment, ceteris paribus.

Rates of return are always positive.