20. Interest rates (yields) on U.S. government bonds never contain a _____.

1) real interest rate

2) expected inflation

3) default risk premium

4) maturity risk premium

21. More liquid bonds have _____ yields since they are easier to sell. The difference in the yields between less liquid bonds and more liquid bonds (all else equal) is called the _____.

1) higher; liquidity premium

2) higher; maturity risk premium

3) lower; liquidity premium

4) lower; maturity risk premium

22. You are considering a 9 percent coupon bond. When the yield to maturity (YTM) is 7.5 percent this bond has a price that is ________ than its face value. In other words, this bond is traded at a ________.

1) higher; premium

2) higher; discount

3) lower; premium

4) lower; discount