When the Interest Rate Rises, Bond Values

question 162

Multiple Choice

When the interest rate rises, bond values

• A) rise.
• B) fall.
• C) are unchanged because the interest rate paid on a bond is fixed.
• D) will either increase or decrease depending on the type of bond.

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Definitions:

Geometric Mean

The central tendency of a set of numbers, calculated by taking the nth root of the product of n numbers, useful for sets of positive numbers.

Measure Of

A general term for a quantitative indicator used to assess or evaluate a specific attribute or property.

Geometric Mean

The central tendency of a set of numbers that is calculated by taking the nth root (where n is the count of numbers) of the product of the values.

Weighted Mean

The mean obtained by assigning each observation a weight that reflects its importance.