#1
What happens to bond prices when interest rates rise?
Bond prices rise
Bond prices remain unchanged
Bond prices fall
There is no relationship between interest rates and bond prices
#2
What does the term 'coupon rate' refer to in the context of bonds?
The interest rate at which a bond pays interest
The annual interest payment divided by the current market price of the bond
The rate of return anticipated on a bond if it is held until it matures
The percentage of the bond's face value that is paid as interest
#3
What does the term 'par value' represent for a bond?
The price at which the bond was initially issued
The annual interest payment divided by the current market price of the bond
The face value or principal amount of the bond
The market value of the bond
#4
Which of the following is NOT a factor in determining a bond's credit risk?
Credit rating of the issuer
Coupon rate
Economic conditions
Financial health of the issuer
#5
What is the term for the date on which the principal amount of a bond is repaid to the investor?
Maturity date
Coupon date
Issue date
Call date
#6
What is the term for the process of spreading investment across different assets to reduce risk?
Asset allocation
Portfolio diversification
Investment aggregation
Risk consolidation
#7
Which of the following represents the correct formula for calculating the present value of a bond?
PV = C / (1 + r)^n
PV = C / r
PV = C * r
PV = C * (1 + r)^n
#8
What does a bond's yield to maturity (YTM) represent?
The annual interest payment divided by the current market price of the bond
The total amount of interest paid over the life of the bond
The rate of return anticipated on a bond if it is held until it matures
The percentage of the bond's face value that is paid as interest
#9
Which of the following factors does NOT typically affect bond prices?
Interest rates
Credit rating of the bond issuer
Economic indicators
Geographic location of the bond issuer
#10
Which term describes the change in bond prices resulting from a change in interest rates?
Interest rate risk
Credit risk
Inflation risk
Price risk
#11
Which of the following is NOT a type of bond yield?
Current yield
Yield to maturity
Coupon yield
Face yield
#12
What does the term 'call provision' refer to in the context of bonds?
A bond issued by a government entity
A provision that allows the issuer to redeem the bond before maturity
A bond with a variable interest rate
A bond with a fixed interest rate
#13
Which bond has the highest interest rate risk?
A short-term bond with a low coupon rate
A long-term bond with a low coupon rate
A short-term bond with a high coupon rate
A long-term bond with a high coupon rate
#14
What is the relationship between bond prices and bond yields?
Inverse relationship
Direct relationship
No relationship
Depends on the bond's coupon rate
#15
What is the key determinant of a bond's price volatility?
Coupon rate
Maturity date
Credit rating
Yield to maturity
#16
What does a bond's duration measure?
Its time to maturity
Its sensitivity to interest rate changes
Its credit risk
Its yield to maturity
#17
Which type of bond has its interest payments adjusted for inflation?
Municipal bond
Corporate bond
Zero-coupon bond
Inflation-linked bond
#18
What is the term for the ratio of risk to return of an investment?
Volatility
Standard deviation
Beta
Sharpe ratio