As the Dollar Is Devaluated

question 173

Multiple Choice

As the dollar is devaluated

• A)inflationary pressures are reduced and our standard of living is reduced.
• B)inflationary pressures are increased and our standard of living is increased.
• C)inflationary pressures are reduced and our standard of living is increased.
• D)inflationary pressures are increased and our standard of living is reduced.

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Definitions:

Zero-Coupon Bond

A bond that does not pay periodic interest payments but is issued at a deep discount from the face value and is redeemed at the face value at maturity.

Duration

A measure of the sensitivity of the price of a financial asset or liability to changes in interest rates, often used with bonds to assess interest rate risk.

Coupon Bond

A coupon bond is a debt security that pays the holder periodic interest payments based on a fixed interest rate until the bond matures, at which point the face value is paid to the bondholder.

Substitution Swap

Exchange of one bond for another more attractively priced bond with similar attributes.