Changes in Interest Rates Affect Bond Prices

question 60

Multiple Choice

Changes in interest rates affect bond prices.Which one of the following compensates bond investors for this risk?

• A)Taxability risk premium
• B)Default risk premium
• C)Interest rate risk premium
• D)Real rate of return
• E)Bond premium

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Definitions:

Self-control Problems

Difficulties in regulating one’s behavior, emotions, or thoughts, often leading to impulsive actions.

Immediate Consequences

The instant results or outcomes that follow a specific action or decision.

Long-term Consequences

The enduring effects or outcomes that result from actions, conditions, or decisions over a prolonged period.

Behavior Therapies

Psychotherapeutic interventions aimed at changing maladaptive behaviors through techniques such as conditioning and reinforcement.