If Overall Interest Rates in the Economy Rise, a Corporate

question 88

Multiple Choice

If overall interest rates in the economy rise, a corporate bond with a fixed interest rate will generally

• A) Increase in value.
• B) Decrease in value.
• C) Remain unchanged.
• D) Become worthless.
• E) Be returned to the corporation.

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Definitions:

Output

The amount of something produced by a person, machine, or industry.

Unemployment

Unemployment refers to the situation in which individuals who are capable of working and willing to work at prevailing wage rates cannot find employment.

Sacrifice Ratio

An economic term that quantifies the effect of decreasing inflation on an economy, typically measured as the percentage loss in output per one percentage point decrease in inflation.

Housing and Financial Crisis

A period characterized by declining home prices, foreclosures, and a loss of value in financial instruments, leading to widespread economic instability.