If You Hold a Bond at a Time When Market

question 27

Multiple Choice

If you hold a bond at a time when market interest rates are increasing, you will find that the bond's value has

• A)remained the same since the interest payment remains constant
• B)increased
• C)increased only if the market interest rate exceeds the interest rate payable on the bond
• D)declined because you will receive a lower price when you sell the bond
• E)increased only if the interest payable on the bond exceeds the market interest rate

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Definitions:

Double Time

A rate of payment that is twice the regular wages, often paid for working on holidays or outside of normal working hours.

Time and a Half

An overtime pay rate, typically 1.5 times the employee's regular hourly wage, paid for hours worked beyond the standard workweek.

FICA Tax

Federal Insurance Contributions Act tax, a U.S. federal payroll tax funding Social Security and Medicare benefits.

Federal Income Tax

A tax levied by the IRS on the annual earnings of individuals, corporations, trusts, and other legal entities.