1) The present value of a bond is determined based on:

A. The bonds stated interest rate

B. The future value of the bonds terminal value

C. The prevailing market interest rate

D. None of the above

2) If interest rates rise, the prices for outstanding bonds will:

A. Fall

B. Rise

C. Increase but then decrease back to the original value of the bond

D. Remain unchanged, bonds pay a fixed rate of interest regardless of the market interest rate

3) Interest payments on bonds that make periodic, semiannual interest payments are calculated by:

A. Multiplying the par or face value of the bond times the prevailing market interest rate.

B. Dividing the coupon rate by the number of coupons in a year and multiplying by par or face value of the bond.

C. Both of the above

D. Neither of the above