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:

Break-even Point

The point at which total costs and total revenue are equal, meaning there is no net loss or gain, and the business is not making a profit.

Materials Cost

The expense associated with the raw materials and supplies used in the production of goods or services.

Labor

The work performed by individuals that contributes to the production of goods or services in an economy, often categorized as manual or skilled tasks.