#1
What is the bond valuation?
The process of determining the worth of a bond
ExplanationValuing a bond's worth.
#2
What does the yield curve represent?
The relationship between bond prices and bond yields
ExplanationDepicts bond price-yield dynamics.
#3
Which of the following factors affects bond valuation?
All of the above
ExplanationMultiple factors impact bond valuation.
#4
What is the relationship between bond prices and interest rates?
Inverse relationship
ExplanationOpposite movement between bond prices and rates.
#5
Which bond valuation method considers the present value of both coupon payments and the bond's face value?
Discounted Cash Flow (DCF) analysis
ExplanationConsiders future cash flows for valuation.
#6
What does a steep yield curve indicate?
Expectation of increasing interest rates
ExplanationForecasts rising interest rates.
#7
Which type of bond carries the highest risk of default?
Corporate bonds
ExplanationHighest default risk.
#8
What is the term for the change in bond price for a 1% change in yield called?
Bond duration
ExplanationSensitivity of bond price to yield change.
#9
What is the term for the difference between a bond's yield and the yield of a benchmark security?
Yield spread
ExplanationDifference in yields.
#10
What is the primary driver of changes in the shape of the yield curve?
Central bank policy
ExplanationMain influence on curve shape.
#11
Which yield curve shape typically indicates an impending recession?
Inverted yield curve
ExplanationSignals recessionary pressure.
#12
What is the term for the risk that a bond issuer will default on its payments?
Credit risk
ExplanationIssuer payment default risk.