Exam 4: The Meaning of Interest Rates

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

If the nominal rate of interest is 2 percent,and the expected inflation rate is -10 percent,the real rate of interest is

The yield to maturity is ________ than the ________ rate when the bond price is ________ its face value.

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.

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

The interest rate on Treasury Inflation Indexed Securities can be roughly interpreted as

If a $1000 face value coupon bond has a coupon rate of 3.75 percent,then the coupon payment every year is

If a financial institution has 50% of its portfolio in a bond with a five-year duration and 50% of its portfolio in a bond with a seven-year duration,what is the duration of the portfolio?

Assuming the same coupon rate and maturity length,the difference between the yield on a Treasury Inflation Indexed Security and the yield on a nonindexed Treasury security provides insight into

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

When the ________ interest rate is low,there are greater incentives to ________ and fewer incentives to ________.

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

Duration is

If the interest rate is 5%,what is the present value of a security that pays you $1,050 next year and $1,102.50 two years from now? If this security sold for $2200,is the yield to maturity greater or less than 5%? Why?

An equal decrease in all bond interest rates

Which of the following are generally TRUE of all bonds?

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

A discount bond is also called a ________ because the owner does not receive periodic payments.

In the United States during the late 1970s,the nominal interest rates were quite high,but the real interest rates were negative.From the Fisher equation,we can conclude that expected inflation in the United States during this period was