For a Given Change in Interest Rates, a Bond's Price

question 57

Multiple Choice

For a given change in interest rates, a bond's price change is _____ related to the bond's coupon rate.

• A) directly
• B) not
• C) inversely
• D) Directly if the bond is selling at a premium, inversely if the bond is selling at a discount.
• E) Directly if the bond is selling at a discount, inversely if the bond is selling at a premium.

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Definitions:

Financial Position

Describes an entity's financial health, assessed by examining its assets, liabilities, and equity at a specific point in time.

Statement of Income

A financial statement that shows a company's revenues, expenses, and net income over a specific period, also known as an income statement.

Bonds

Fixed-income investment products representing loans made by an investor to a borrower, typically corporate or governmental, which borrows the funds for a defined period at a variable or fixed interest rate.

Common Shares

Equity securities that represent ownership in a corporation, giving holders voting rights and a share in the company's profits.