Bond Valuation and Factors Influencing Prices Quiz

Various factors such as interest rates, credit risk, and market demand affect bond prices.

Bond prices typically move inversely to changes in interest rates.

The coupon rate is the annual interest payment a bondholder receives.

Government regulations typically do not directly influence bond prices.

Corporate bondholders usually receive higher interest payments compared to government bondholders.

PV represents the present value, C is the coupon payment, r is the discount rate, and n is the number of periods.

YTM is the total return anticipated on a bond if held until it matures.

The coupon rate is determined by prevailing interest rates in the market.

Bond prices decrease when interest rates rise.

The maturity date is when the bond issuer repays the principal amount to the bondholder.

Longer maturity bonds generally have higher interest rate risk.

Zero-coupon bonds do not make periodic interest payments.

Accretion refers to the gradual increase in a bond's value over time as it nears maturity.

Credit risk refers to the risk of default by the bond issuer.

Yield to maturity represents the total return anticipated on a bond if held until it matures.