Prices of Existing Bonds Move ________ as Market Interest Rates

question 31

Multiple Choice

Prices of existing bonds move ________ as market interest rates move ________.

• A) up; up
• B) up; down
• C) Bond prices don't move as market interest rates move.
• D) Only new bond prices move with the market interest rate.

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Definitions:

Compensating Balances

Minimum balance requirements imposed by banks on corporate customers in exchange for banking services or loans.

Trust Receipts

Documents acknowledging the receipt of goods by a trustee while detailing the terms of an agreement for selling or holding the goods.

Collateral

An asset backing a loan. In the event of default the collateral becomes the property of the lender to satisfy the obligation. Also called security for the loan.

Public Warehouses

Warehousing facilities operated by third parties that offer storage and handling services to the public for a fee.