If Interest Rates Consistently Rise Over a Specific Period, the Market

question 31

Multiple Choice

If interest rates consistently rise over a specific period, the market price of a bond you own would likely ____ over this period. (Assume no major change in the bond's default risk.)

• A) consistently increase
• B) consistently decrease
• C) remain unchanged
• D) change in a direction that cannot be determined with the above information

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Definitions:

Compensation

Payment or benefits provided to employees in exchange for their labor or services, including salaries, wages, and benefits packages.

Principal-agent Relationship

A dynamic between a principal, who delegates tasks, and an agent, who performs tasks on the principal's behalf, often leading to issues related to alignment of interests.

Decision Makers

Individuals or groups responsible for making choices that influence outcomes or the direction of a project, strategy, or organization.

Information

Data, facts, or knowledge conveyed or represented in a format that is understandable and can be used to make decisions.