The Market Value of a Fixed-Rate Liability Will Increase as Interest

question 40

True/False

The market value of a fixed-rate liability will increase as interest rates rise, although the market value of a fixed-rate asset will decrease as interest rates rise.

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Definitions:

Compounded Semi-Annually

A method of calculating interest where the interest is added to the principal twice a year, leading to interest on interest.

Monthly Contributions

Regular payments made into a financial scheme, savings, or investment plan every month.

Interest Earned

The amount of money gained as interest from an investment or savings over a period of time.

Compounded Monthly

A method of calculating interest where the accumulated interest is added to the principal at the end of each month, leading to an increase in the amount of future interest.