Exam 4: Understanding Interest Rates

The price of a consol equals the coupon payment

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

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

Your favorite uncle advises you to purchase long-term bonds because their interest rate is 10%.Should you follow his advice?

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

If a perpetuity has a price of $500 and an annual interest payment of $25,the interest rate is

A ________ is bought at a price below its face value,and the ________ value is repaid at the maturity date.

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

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.

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

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

The ________ is the final amount that will be paid to the holder of a coupon bond.

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

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

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

A bond that is bought at a price below its face value and the face value is repaid at a maturity date is called a

An equal decrease in all bond interest rates

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

The duration of a coupon bond increases