Exam 4: Understanding Interest Rates

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?

The interest rate on Treasury Inflation Protected Securities is a direct measure of

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

If a $5,000 face-value discount bond maturing in one year is selling for $5,000,then its yield to maturity 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?

Which of the following are generally true of all bonds?

The present value of a fixed-payment loan is calculated as the ________ of the present value of all cash flow payments.

For simple loans,the simple interest rate is ________ the yield to maturity.

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

With an interest rate of 6 percent,the present value of $100 next year is approximately

The concept of ________ is based on the common-sense notion that a dollar paid to you in the future is less valuable to you than a dollar today.

The price of a coupon bond and the yield to maturity are ________ related; that is,as the yield to maturity ________,the price of the bond ________.

If $22,050 is the amount payable in two years for a $20,000 simple loan made today,the interest rate is