Question 1

1). When the central bank raises the interest rates, then generally

a. bond prices increase and stock prices decrease

b. bond prices decrease and stock prices increase

c. bond prices and stock prices tend to decrease

d. bond prices and stock prices tend to increase

P.S. is the correct answer "c" option? pls explain.

2). Which of the following must be true regarding the bond described by the cash flow stream (-100, 5, 105)? (select all that apply)

a. the yeild on the bond is 5%

b. the bond is trading at par

c. the coupon rate is 5%

d. it is equivalent to the bond (-50, 3, 53)