An Equal Increase in All Bond Interest Rates

question 96

Multiple Choice

An equal increase in all bond interest rates

• A)increases the return to all bond maturities by an equal amount.
• B)decreases the return to all bond maturities by an equal amount.
• C)has no effect on the returns to bonds.
• D)decreases long-term bond returns more than short-term bond returns.

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Definitions:

Domestic Price

The price of a good or service within a country, determined by domestic demand and supply.

Employment Levels

The number or percentage of people within a population who are currently employed, indicating the health of an economy.

International Gold Standard

A monetary system in which the standard economic unit of account is based on a fixed quantity of gold, allowing for stable exchange rates among countries.

Gold Flow

The movement of gold between countries, often used as a form of international payment or to stabilize currencies under the gold standard.