1. The yield to maturity is always equal to the simple interest rate on a simple loan.

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1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
True
False
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
2. A bond with a higher default risk will always have a lower yield to maturity than a default-free bond of the same maturity.
True
False
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
3. According to the expectations theory, the interest rate on a long-term bond is equal to the average of current and expected future short-term interest rates.
True
False
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
4. Municipal bonds usually have higher yields than U.S. Treasury bonds due to their lower liquidity and default risk.
True
False
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
5. The Fisher equation states that the nominal interest rate is equal to the real interest rate plus expected inflation.
True
False
6.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
6. Which of the following best describes the concept of present value?
The value of money increases over time due to inflation.
A dollar received in the future is worth more than a dollar today.
The value of future cash flows discounted to the present at a given interest rate.
The total amount of interest earned over time.
7.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
7. What happens to bond prices when interest rates rise?
Bond prices increase.
Bond prices decrease.
Bond prices remain unchanged.
It depends on the bond’s maturity.
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