The Reason Bond Prices and Interest Rates Are Inversely Related

question 29

Multiple Choice

The reason bond prices and interest rates are inversely related is because

• A) bond prices are fixed for the life of a bond.
• B) market interest rates stay the same for the life of a bond.
• C) the coupon payment is fixed for the life of a bond.
• D) bonds are always perpetuities.

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Definitions:

Stimulus Generalization

A phenomenon in which responses to one stimulus are also produced by similar stimuli.

Modeling

The process of learning by observing and imitating the behavior of others.

Exposure Technique

A therapeutic method used in treating anxiety disorders that involves the gradual exposure of a patient to their feared object, situation, or thought without any danger, to overcome their anxiety.

Feared Object

An item or situation that triggers a phobic or intensely fearful response in an individual.