Zero coupon bonds are disadvantageous to the issuing firm if interest rates fall. Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a True False

1. Use the following statements to answer questions 1-2. Statement 1: Modified duration is a better measure for a bond’s sensitivity for shaping risk than key rate duration. Statement 2: Effective duration is a better measure for a bond with an embedded option than modified duration. Statement 3: Spread duration is a measure of the risk-free rate change. Statement 4: Modified duration is a measure of curve duration.   A. Statement 3   B. Statement 4   C. Both statement 3 and 4   D. Neither statement

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The money market is the short-term market for stocks and bonds. Select one: True OR False

Solve this practice problem. Both pictures are the same problem

Price risk is the risk that Select one: a. the bond principal will not be paid in full or on time. b. market prices increase due to market interest rate changes making bonds more expensive to purchase. c. the bonds in a dedicated portfolio will decrease in value in response to an increase in interest rates. d. the yield-to-maturity will be less than the inflation risk causing the real rate of return to be negative. e. coupon payments will be reinvested at a rate that is less than the bond's yield-to-maturity

Bond ratings predict the probability of default. Select one: True OR False

Bonds that have investment-grade ratings from sources such as S&P tend to have higher interest (coupon) rates due to higher default risk. True False

Historical evidence indicates that stocks Seleccione una: a. underperform bonds. b. outperform bonds. C. Are less risky than bonds. d. have the same return as bonds.

Zero-coupon bonds has higher yield than otherwise identical coupon paying bonds. Select one: True False