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4 Written questions

3 Multiple choice questions

  1. the percentage change in the market price of a bond over some period of time
  2. a bond that sells below its par value. this occurs whenever the going rate of interest rises above the coupon rate
  3. a bond that sells above its par value. this occurs whenever the going rate of interest falls below the coupon rate

3 True/False questions

  1. interest (current) yieldthe risk of changes in bond prices to which investors are exposed due to challenging interest rates

          

  2. yield to maturity (YTM)the average rate of return earned on bond of it held to maturity

          

  3. interest rate reinvestment riskthe risk that income from a bond portfolio will vary because cash flows must be reinvested at current market rates