Question
26 . Suppose that the expected return on bonds falls relative to other assets. In the bond market this will result in: Multiple Choice the
26 .
Suppose that the expected return on bonds falls relative to other assets. In the bond market this will result in:
Multiple Choice
- the bond supply curve shifting left.
- a movement down the bond demand curve.
- a shift to the left of the bond demand curve.
- an increase in the price of bonds.
27 .
Suppose that the return on assets other than bonds falls. In the bond market this will result in a(n):
Multiple Choice
- movement down the bond demand curve.
- shift to the left of the bond demand curve.
- increase in the price of bonds.
- shift to the left of the bond supply curve.
28 .
The return on bonds rises relative to other assets, in the bond market this will result in:
Multiple Choice
- the price of bonds falling and the yields increasing.
- a rightward shift in the bond supply curve.
- a shift to the left of the bond demand curve.
- an increase in bond prices.
29 .
The market for bonds is initially described by the supply of bonds - S0, and the demand for bonds - D0, with the equilibrium price and quantity being P0and Q0. Suppose that the expected return on bonds falls relative to other assets. In the bond market this will result in:
Multiple Choice
- Bond supply curve to shift to S1
- Bond demand curve to shift to D1
- Bond supply curve to shift to S2
- Bond demand curve to shift to D2
30 .
Which of the following is true of interest-rate risk?
Multiple Choice
- It is the risk that the coupon rate for a bond will change, affecting current bondholders' coupon payments.
- It refers to the probability that a borrower will default on debt obligations.
- It is the risk that the face value of a bond will change before maturity.
- Individuals owning long-term bonds are exposed to greater interest-rate risk.
31 .
U.S. government bonds that provide for bondholders to receive a fixed rate of interest plus the change in the consumer price index were designed to remove:
Multiple Choice
- default risk.
- liquidity risk.
- inflation risk.
- interest-rate risk.
32 .
Interest-rate risk would not matter to which of the following bondholders?
Multiple Choice
- A holder of a U.S. government bond.
- A holder of a U.S. government bond indexed for inflation.
- A holder of a U.S. government bond who plans on selling it in one year.
- A holder of a U.S. government bond that plans on holding it until it matures.
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