Exam 4: The Meaning of Interest Rates

I purchase a 10 percent coupon bond. Based on my purchase price,I calculate a yield to maturity of 8 percent. If I hold this bond to maturity,then my return on this asset is

The return on a 5 percent coupon bond that initially sells for $1,000 and sells for $950 next year is

Which of the following are TRUE of fixed payment loans?

All else equal,when interest rates ________,the duration of a coupon bond ________.

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?

All else equal,the ________ the coupon rate on a bond,the ________ the bond's duration.

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

The yield to maturity for a perpetuity is a useful approximation for the yield to maturity on long-term coupon bonds. It is called the ________ when approximating the yield for a coupon bond.

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

For a 3-year simple loan of $10,000 at 10 percent,the amount to be repaid is

Which of the following $5,000 face-value securities has the highest yield to maturity?

A $1,000 face value coupon bond with a $60 coupon payment every year has a coupon rate of

Assuming the same coupon rate and maturity length,when the interest rate on a Treasury Inflation Indexed Security is 3 percent,and the yield on a nonindexed Treasury bond is 8 percent,the expected rate of inflation is

The riskiness of an asset's returns due to changes in interest rates is

There is ________ for any bond whose time to maturity matches the holding period.

What is the present value of $500.00 to be paid in two years if the interest rate is 5 percent?

If you expect the inflation rate to be 4 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

If a security pays $55 in one year and $133 in three years,its present value is $150 if the interest rate is

Which of the following are TRUE for discount bonds?

The yield to maturity for a one-year discount bond equals the increase in price over the year,divided by the